UK mortgage rates have hit a record low this spring, opening up the market to both new and old buyers.
Lending secured on dwellings increased by £0.3 billion in April, according to the latest figures from the Bank of England, compared to the average of £4.2 billion over the previous six months. Gross lending secured on dwellings was £19.2 billion and repayments were £18.6 billion.
The figures also highlight just how far mortgage rates have fallen in recent weeks and months, as the UK base rate remains at a historic low. The average mortgage rate in April 2016 was 2.41 per cent, down from 2.49 per cent in March 2016.
Lenders are not resting on their laurels, though, with a rate war unfolding as they compete for customers. Nationwide is slashing rates for fixed-rate and tracker mortgages by up to 0.25 per cent, reports The Daily Mail, with HSBC also offering a two-year mortgage at a rate of 1.16 per cent and Yorkshire Building Society has cut its own rate to 1.14 per cent.
The Telegraph notes that a total of 497,301 mortgages were approved in the first four months of the year, 17.6 per cent higher than the same period a year ago.
Richard Sexton, director of Chartered Surveyor e.surv, highlights the benefits of the low interest rates for first time buyers: “House prices continue to increase, but financial factors – particularly low inflation and rising wages – are helping first timers step onto the property ladder. Both factors have helped savings and with government schemes such as the Lifetime ISA leading the way, there’s nothing to suggest first-time buyer lending won’t go from strength-to-strength as we approach the second half of the year.”
Linden Homes also highlights the favourable conditions for older buyers looking to step up the housing ladder.
Tom Nicholson, divisional managing director at Linden Homes, comments: “These new mortgages offering people the chance to lend later in life are ideal for those people in their 40s and 50s who are considering a property move, but may’ve been restricted previously by the length of term they could borrow money for. This is another move by the lenders to drive the market and reflects the changing habits of people renting for longer and moving up into larger homes, later in life.”