New figures from the Bank of England have revealed that the UK’s large mortgage market is well on the way to recovery. The latest data shows that initiatives such as the Funding for Lending and Help to Buy schemes are driving applications with mortgage lending in the summer of 2013 hitting its highest level since before the global financial crisis.
The buoyant mortgage market is also partly thanks to falling interest rates with the latest figures showing that the average lending rate in the UK is now at its lowest level ever. Keep reading to find out more.
Gross mortgage lending hits highest level since 2007
The latest data from the Bank of England has revealed that gross mortgage lending reached its highest level since 2007 in the second quarter of 2013. The Guardian reports that ‘sharp increases in the number of first-time buyers and buy-to-let landlords entering the market fuelled a busy three months for the mortgage industry.’
Between April and June 2013, a total of £41.6 billion worth of new loans were advanced to borrowers, a 23 percent increase on the first three months of the year and 13 percent higher than in the same period in 2012. The quarter-on-quarter rise in lending is the biggest since 2007, when the housing market boom was at its peak.
An increase in the number of mortgage deals available at higher loan to values also helped the market. A greater choice of low deposit deals meant that lending to first time buyers increased, with the Bank of England date showing that the share of the market taken by mortgages at a high loan to value (which it defines as above 90 percent of the property’s price) increased from 2.1 percent in the first quarter to 2.5 percent.
The value of mortgages advanced to new entrants in the property market was up by almost one third (31 percent) year-on-year, at £8 billion. Over the same period, new mortgage lending for buy-to-let also increased from £3.9 billion to £5 billion.
“A combination of factors has certainly helped to drive the large mortgage market forward,” said Islay Robinson, CEO of London mortgage advisor and high value mortgage specialist Enness Private Clients. “The improving economy and the impact of the Funding for Lending and Help to Buy schemes have sent mortgage lending to pre-credit crunch levels. Market sentiment is also improving and there are clear signs that we’re well on the way to recovery.”
The Bank of England also revealed that the cost of mortgage deals in the UK has also hit a record low. Official data shows that the overall average interest rate on gross mortgage advances fell to just 3.47 percent in the second quarter of 2013 – the lowest interest rate on record.
“Interest rates have hit record lows over recent weeks and it’s now possible to secure two year fixed rate deals at under 1.5 percent and five year deals under 2.5 percent. Many people now believe rates have hit rock bottom and so thousands of people are acting now to secure these terrific rates,” added the million pound mortgage expert.
