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Rates on new mortgages continue to fall
Interest rates on new mortgages continue to fall according to the Council of Mortgage Lenders ( CML) while the average rate on the outstanding stock is stable.
The average rate on mortgages advanced in February fell to 3.83%, has declined each month from 4.34% last August. The largest falls have been on shorter-term fixed rates. The average rate on all outstanding loans was unchanged at 3.67% in the month. This is slightly higher than the low of 3.56% in October, but still extremely low on any historic comparison and is likely to help keep arrears rates relatively low.
Approvals for house purchase fell a little to 47,100, but up 20% on a year earlier. This is very much in line with the CML forecast for activity to remain subdued early in the year in light of the rush to beat the end of the stamp duty holiday late last year, and uncertainty over the economic and political outlook. The new stamp duty exemption for first-time buyers on properties up to £250,000 is likely to boost activity in the coming months, although it is extremely difficult to assess how many potential buyers will qualify and what the impact will be.
The CML continues to expect refinancing activity to remain subdued throughout most of this year with official interest rates and therefore most variable mortgage rates unlikely to rise for some time yet.
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