Mortgage Rates Hit all Time Low

by Mark Johnston

The UK mortgage rates have hit their lowest point in the last 23years. This is great news overall but with high deposits still being asked for by lenders overall sales are still subdued compared to where they could be.

According to the online financial information service Moneyfacts, interest rates are at their lowest point for the last 23 years on new mortgages.

Market experts are expecting the housing and mortgage market to continue to remain flat for a little while further. There was a slight rebound in May but industry experts are still holding steady that there is further gloom on the horizon.

According to the Council of Mortgage Lenders (CML) gross mortgage lending for the UK is estimated to be in the region of £11.3 billion for May. This is an increase of about 12 per cent from the previous month. This is only slightly less than the 11 per cent from May 2010.

The CML said that they didn’t expect any significant change to the status quo in the near future. These figures were released as the government launched another scheme to try and help first time buyers get a foot on to the housing market. The scheme is a combined effort from the government and housebuilders to offer an equity loan of up to 20 per cent to potential buyers.

£500 million is being made available by the Government all over the UK for the next two years to fund this scheme by the name of FirstBuy. There is an expectation that over 10,000 people in mainland UK will be helped through this schme.

Over 100 builders have opted in to help out, and banks have agreed to offer the 75 per cent LTV.

The money released into the FirstBuy programme will be interest free for up to five years and the interest will be charged at 1.75 per cent in the sixth year and after that interest would be charged at inflation rate plus 1 per cent.

According to Moneyfacts “Earlier this year the market expected a rise in bank base rate, that saw mortgage rates start to rise,”

“An imminent rise in bank base rate now appears unlikely, and the cost of funding on the swap rate market has reduced.”

“Lenders appear to be applying cuts equally across all loan-to-value (LTV) tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands,”

Money Supermarkets, Clair Francis said that “Interest rates will start rising at some point though, so anyone considering a variable rate deal needs to make sure they’ll be able to afford higher monthly repayments.”

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