Mortgage approvals rise as raft of great deals tempt borrowers
Posted 10 February 2015 by Keith Osborne
The latest official data from the Bank of England has revealed that mortgage approvals in the UK rose in December for the first time in six months. The news came just a month after approvals hit a 17-month low and experts have attributed the increase to a bigger choice of low-cost deals in the marketplace. Strong competition is pushing down rates and encouraging borrowers into the market.
The latest Bank of England figures have revealed that the number of mortgage approvals rose in December after six months of contraction. There were 60,275 mortgage approvals for house purchases in December, up from 58,956 in November.
Commenting on the figures, Keith Osborne, editor of whathouse.com, says: “As the prospect of an interest rate rise recedes it seems that buyers have been tempted back into the property market. In addition, the strong competition between lenders has driven down the cost of borrowing and there are certainly some tempting deals available on the High Street.”
Rob Wood, chief UK economist at Berenberg bank, adds: “Cheap and falling mortgage rates, now rising real wages, rapidly declining unemployment and elevated consumer confidence all bode well for the housing market this year.”
Another record-breaking mortgage rate as deals head towards 1%
The Bank of England figures come after a major lender announced yet another market-leading product. City AM reports that HSBC is set to offer a two-year fixed-rate mortgage at just 1.19%; the latest move in a highly competitive market. Available to 60% borrowing the deal comes with a £1,499 fee.
Mortgage expert Brian Murphy told the newspaper that mortgage lenders “are in a race to the bottom#2 and that it is possible that interest rates will dip to below 1% this year.
And, competition in the mortgage sector is set to increase even further this year when TSB begins to offers its mortgages through intermediaries and brokers. This will help the new bank to reach more customers.
Osborne urges borrowers to consider the overall cost of a deal when comparing products. He says: “While the HSBC fixed rate may be the lowest available it does come with a significant fee of £1,499. In comparison, Yorkshire Building Society currently offers a two-year fixed rate at 1.29% with a lower fee of £975.
“When comparing deals it is important to consider both the rate and the fee. On smaller mortgages it may be more cost effective to pay a higher rate and a lower set-up charge.”