According to the Bank of England’s credit conditions survey, banks and building societies expect mortgage rates to continue falling over the next few months.
Mortgage rates went down over the first quarter, says the Bank of England – the third quarter in a row. Lenders taking part in the survey also said they believed rates would continue to go down over the coming months.
The news will no doubt be welcomed by those among our landlord and buy to let insurance customers who are seeking credit for future property investments.
Among the reasons suggested for the drop is the Funding for Lending scheme, which makes it cheaper for banks and building societies to borrow, and therefore makes it cheaper for individuals to borrow, too. In addition, increased competition was cited as a reason for lower rates.
Under the conditions of the Funding for Lending scheme (FLS), lenders are given access to low interest cash with the proviso that they lend it – either to individuals or to small commercial enterprises.
The Bank of England also reported that lending to people with small deposits (under 25%) had risen. On the downside, a larger proportion of applicants were having their credit requests turned down due to poor credit scores.
Despite the improved access to cheap credit, however, the overall number of individuals obtaining credit has gone down. The Bank recently reported that mortgage approvals in February were at their lowest level since September 2012.