More Cheap Mortgages On the Way

26 Jul 2016

UK mortgage interest rates, which are already at record lows, have fallen even further in the first half of the year and "show no signs of stopping", according to Moneyfacts.

The financial information service said the cost of all types of fixed rate mortgage had fallen on average since January. The company said the lower costs were driven by competition in the market.

Even though loan costs have fallen, many would-be first-time buyers still struggle to gather the funds required to get onto the property ladder.

Government figures released last week show that the number of first-time buyers in England has fallen by a third over the past decade.

A report from UK's largest mortgage lender the Halifax, published on Saturday, shows that house prices are on average 12.5 times local earnings in the most unaffordable area of the country for property, Brent, in north London.

The Halifax data also shows that first-time buyers face the highest prices in London, paying £384,000 on average, compared to just £110,00 in Northern Ireland.

However, once on the ladder, homeowners are seeing historically low costs for home loans.

Moneyfacts said that those looking for a mortgage now would be considerably better off than they would have been had they looked six months ago.

A borrower with a £200,000, average five-year, fixed rate, 25-year repayment mortgage would pay £240 less now than if they had taken the same mortgage in January.

Average rates for two-year, five-year and 10-year deals have all fallen since the start of the year, with the most common two-year terms now recording an average rate of 2.52%.

"With competition still fierce in the market it is little surprise that mortgage rates have fallen in the first half of 2016, reaching record lows yet again and currently showing no signs of stopping," said Charlotte Nelson, at Moneyfacts.

"While the economy may have faced some uncertainty after the EU referendum one thing is for certain: mortgage competition is currently here to stay."

 

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