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Mortgage lending and the cost of mortgages both remain stable

Posted 26 April 2017

Experts believe that both the housing and mortgage markets are set for a period of stability, as uncertainty about the economic outlook post-Brexit remains

New data has revealed that both mortgage lending and the cost of new mortgages remained stable this spring.

With lending having slipped in to ‘neutral gear’, the cost of the best mortgage deals has also remained virtually the same since the start of 2017.

March mortgage lending down 19% on 2016

New figures from the Council of Mortgage Lenders (CML) have revealed that gross mortgage lending has slipped into ‘neutral gear’.

£21.4 billion was lent in March, 19% lower than the same month in 2016. The fall was in line with expectations, with the Daily Telegraph reporting that this was ‘artificially created by a surge last March of buyers looking to purchase buy-to-let properties before stamp duty was hiked by 3%.’

The CML said that there had been a shift away from home movers and buy-to-let landlords towards first-time buyers and those remortgaging. CML's senior economist Mohammad Jamei described lending as being "in neutral gear".

He added: “We expect this profile to continue over the short term, as low mortgage rates encourage existing borrowers to remortgage and Government schemes help first-time buyers. We do not expect any marked effect from the general election.”

Mortgages ‘moving towards a period of cost and rate stability’

While mortgage lending may be ‘in neutral gear’, the cost of borrowing has also stabilised in recent months.

The latest data from Mortgage Brain has revealed that the cost of the lowest five year fixed rate mortgage at 90% loan to value (LTV) has fallen by just 1% since January. 90% LTV two and three year fixed rates, and a 60% five year fixed, are all just 0.2% cheaper than they were three months ago.

By comparison, two, three and five year tracker rates at 60% LTV have all remained inactive, with mortgage costs remaining static to those offered at the beginning of the year.

Despite little change in the short term, the analysis revealed that mortgage costs have fallen over the last twelve months. The lowest rate 90% LTV five year fixed now costs 5% less than it did this time last year while the cost of a three year fixed rate at 90% LTV is now 4% lower than April 2016.

Mark Lofthouse, CEO of Mortgage Brain, said: “Our latest product data analysis shows that there’s little to get excited about in terms of rate and cost movement over the past three months. Following the long period of record lows, however, our short terms analysis can be seen as another sign that we’re moving towards a period of cost and rate stability, or even potential rises.”

 

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