Mortgage blog: Record low rates see the biggest jump in lending since the housing boom
Official figures from the Bank of England have confirmed what many experts have been saying over recent weeks: namely that mortgage rates in the UK have now reached a record low. The average mortgage interest rate in the second quarter of 2013 fell to 3.43% while the average rate for new mortgages tumbled from 3.65% to 3.47%.
And access to cheaper mortgage deals has had a significant effect on the UK's mortgage market with lending in the summer of 2013 having reached its highest level since before the global financial crisis. We analyse the new data and look at whether mortgage rates have reached rock bottom.
Average mortgage rate falls to record low
The latest data from the Bank of England has revealed that the average mortgage interest rate fell to 3.43% in the three months to June, down from 3.47% the previous quarter. This is the lowest figure since the Bank's records began in 2007 but experts believe it is the lowest level ever thanks to the low base rate and the impact of the Funding for Lending scheme.
A spokesman for the Council of Mortgage Lenders said: "Such low rates are keeping costs down for existing borrowers and they are also enabling people to get on the housing ladder more affordably, even though house prices remain high. Interest rates will remain low for the foreseeable future, but both householders and lenders need to stress-test an ability to service higher rates at some point in the future."
The Bank of England figures also revealed that these low rates have resulted in the highest jump in mortgage lending since 2007. The total value of new mortgages advanced between April and June 2013 reached £41.6bn, a rise of 23% on the first quarter and the highest quarterly increase since 2007. The value of first-time buyer loans also rose significantly year up year, reaching £8bn in the second quarter of 2013 - a 31% rise.
"While it's great news for borrowers that rates have hit a record low, there are signs that deals are at rock bottom," said Keith Osborne, editor of WhatHouse.co.uk. "Even since the Bank of England data was compiled rates have started to creep up and so we may not see mortgage deals at these sorts of levels for very long. If you're thinking of remortgaging or getting a new mortgage now could well be the time to do it. It's very unlikely that deals are going to get any cheaper and so it may well pay to take advantage of the current products sooner rather than later."
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