UK Mortgage Lending Fixed Rate Sees Lowest Level Since 1995
Since January of 1995 when data on fixed rate mortgages started to be collected, rates have never been this low. A recently released report by the Bank of England has indicated that rates with some lenders are as low as 3.36%. The same report showed the average of fixed rate mortgages stood at a little more than 3.5%, which is a marginal move off the month prior when the average was 3.67%. Increased competition within the last few months could be the culprit for the rates going so low. Ever since the intense rumors about the base rate hike diminished, competition among lenders ratcheted up several notches.
Over the course of the last few months lenders have been strategizing about how to grab a bigger part of the lending market pie. This has led to extremely attractive rates for borrowers and remortgagers. Considering many lenders missed their mid-year lending targets, competition has been fueled even further. With the income of families across the UK dwindling due to job loss or simply lower wages, the increased competition among lenders has helped balance out the losses and aided families across the UK.
Director of Private Finance, Melanie Bien, commented on the attractive deals now available to those who are buying or remortgaging a home, saying: “These figures show that there are some very cheap deals around and if you have a good sized deposit you can dramatically reduce your monthly mortgage payments. Some people have absolutely benefited from the crisis.”
Working from the historically low base rate of 0.5%, lenders have been privy to making deals in different shapes and forms. Although demand for more mortgage lending in general has decreased over the past twenty four months, light at the end of the tunnel should be evident within the coming months. The recent HSBC plans of a layoff are proof that the current conditions are not sustainable or favorable for the lending market going forward.