Mortgage market still robust

The debate taking place in recent weeks had been around not would the Monetary Policy Committee raise or reduce interest rates this month, but whether they would vote to re-introduce their programme of monetary stimulus known as Quantitative Easing (QE).

The Bank base rate has remained unchanged but the decision has been made that a further £75bn of new money will be injected into the economy through the purchase of assets including government bonds.

With the UK’s underwhelming second quarter gross domestic product figures actually being revised downwards to only 0.1 per cent from a previously reported 0.2 per cent it would appear that the MPC has recognised that the economy is in need of further medicine to attempt to keep us from falling back into recession.

This, combined with the continuing crisis in the Eurozone, is having a further negative effect on already weak consumer confidence.

Activity in the mortgage arena has been fairly steady throughout the summer period and we have witnessed a small upward bounce in activity during September, which from a seasonal historic perspective is fairly normal, albeit at lower overall volume levels than in the boom years.

In spite of the turmoil in world stock markets and the Eurozone debt crisis, the UK mortgage market has continued to be reasonably robust. Mortgage product pricing remains at low levels with Moneyfacts reporting that borrowers requiring 90 per cent LTV, traditionally first time buyers and those movers with low levels of equity, can now access two-year fixed rates at an average of 5.39 per cent.

The average two-year fixed rate is now 4.22 per cent, marginally up on September, but five-year fixed rates have fallen further and the average is now 4.73 per cent. These rates have stimulated increased activity amongst purchase and remortgage borrowers during September as people capitalise on these unprecedented rates.

Overall mortgage product numbers declined a little in September but have rebounded in the first week of October, returning to levels similar to August.

Intermediaries currently have access to around 7,300 deals, almost 50 per cent more than the same period last year.

For further information on how the latest base rate decision affects you, please call Fiona Harpham 01926 436113 [email protected] or Nick Shergold 01926 436103 [email protected]

Pictured: Fiona Harpham and Nick Shergold