The average mortgage rate in the UK dropped to 3.42 per cent in the three months to June – down from 3.47 per cent the previous quarter – according to the UK’s central bank. The Bank of England also revealed that new mortgage buyers were enjoying rates of 3.47 per cent, down from 3.65 per cent.
But since those figures have been released, rates are said to be climbing once again, suggesting that the long period of low rates may be coming to an end.
The figures follow news that house prices are rising at the highest rate for three years, spurred by renewed confidence in the property market.
The entire value of new mortgages advanced between the start of April and the end of June amounted to $41.6 billion – a rise of 23 per cent on the first quarter.
Year on year, loan values to first time buyers have risen by 31 per cent, amounting to £8 billion in Q2. The number of those falling behind in payments decreased by 12 per cent in quarter 2, quarter-on-quarter.
One of the reasons the UK has seen record low mortgage rates is that the Bank of England base rate is at an all-time-low. Experts point out that rates are not going to get any more affordable than at the present moment, so the idea of re-mortgaging with a fixed rate deal is something to consider seriously – sooner rather than later.
Availability of loans has been boosted by two cornerstone Government initiatives – Help to Buy and Funding for Lending, which has helped to trigger a price war among lenders. It has also boosted business for all kinds of associated industries, such as home furnishers, removals firms – and of course buy to let and unoccupied property insurance providers.
Fears that the increased activity in the property market could lead to a housing bubble have so far been unfounded. And if one does occur, the Government will hope it does so after the next election.