Increased demand for fixed rate mortgages |
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| Strategic Finance | |
| Written by Paul Williams | |
| Wednesday, 22 April 2009 | |
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Consumers seek to take advantage of low rates while mortgage lending creeps up on a monthly basis.
Eight out of ten new mortgage applications being received by home loan providers are for fixed rate deals, it has been found. Broker John Charcol said that in the first quarter of this year, take-up of fixed rates has soared as consumers have sought to take advantage of low rates before they rise once again. In March 2009, some 80.9 per cent of applications were for fixed rate mortgages, up from 29.1 per cent in December 2008, it discovered. Ray Boulger of John Charcol said: "With the bank rate now at 0.5 per cent there is only one way for it to go - the only questions being the timing and the scale and speed of the increase." He added that rates on many tracker mortgages are coming in at much higher margins then the base rate, which is putting off borrowers. At the same time, there are only a small number of trackers above 75 per cent loan to value available on the market. The Bank of England base rate was kept on hold in March following six consecutive cuts. The good news is that gross mortgage lending, while falling 52 percent year-on-year there was a 16 percent increase on the February figure of 9.9 billion pounds. "While the market is beginning to show some signs of stabilising, housing transactions and lending are set to remain low for the foreseeable future," CML director general Michael Coogan said in a statement.
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