Cheap mortgage deals fall to record low... again
New figures from the Bank of England have revealed that home buyers in April paid the lowest ever interest rates on their mortgages.
Forecasts for an interest rate rise have been pushed back and some experts even believe that the Bank may cut rates in the coming months. All this has meant that the deals available to homebuyers have plummeted to the lowest levels ever.
Borrowers in April pay an average of just 2.41%
In early 2016, many banks and building societies withdrew some of their best mortgage deals in the expectation that the Bank of England was set to raise interest rates. However, with the likelihood of a rate rise receding, borrowers are now benefiting from record low rates.
Figures from the Bank have revealed that, in April, the average borrower paid just 2.41% on a new mortgage, down from 2.49% in March and 2.64% in April 2015.
Five years ago the average rate was 3.84%, and while in April 2004, when records began, the average mortgage rate was 4.55%.
Mortgage lending in 2016 at highest level since financial crisis
The data also showed that mortgage lending so far this year is at its highest level since the financial crisis. A total of 497,301 mortgages were advanced between January and April, up 17.6% on the same period in 2015.
There were 119,796 mortgages advanced in April, up 4.5% on a year ago but down from March's level of 124,429. A rush to complete purchases before changes to buy-to-let rules led to a spike in last month's figures.
Howard Archer, chief economist at IHS Global Insight, says: “The strong suspicion is that housing market activity will be under pressure in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership.
“Nevertheless, we expect housing market activity to regain limited momentum in the latter months of 2016 on the assumption that a vote to stay in the EU reduces uncertainty and supports a pick-up in economic activity. High employment, decent purchasing power and the probability that interest rates will not rise for some considerable time to come should underpin house buyer interest."
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