The Bank Base Rate has been maintained at 0.5% for the 15th consecutive month.
The Monetary Policy Committee of the Bank of England voted to maintain the Base Rate at its current level amid ongoing economic uncertainty.
The decision will be welcomed by mortgage borrowers on tracker deals, which are linked to the Bank Base Rate, and also by people sitting on the Standard Variable Rates (SVRs) of those lenders who have promised not to increase the rate by more than a given margin over Base Rate.
Jonathan Samuels, chief executive of Drawbridge Finance, said:
"Interest rates are on hold again but the hawks, led by Andrew Sentance, are beginning to circle. The minutes of this latest MPC meeting due to be published later in the month will offer a strong clue as to when Bank Rate will finally rise.
"Even when rates do rise, we expect the percentage increases to be small and incremental and this, coupled with the fact the market has already begun to price them in, is unlikely to put the property market into reverse.
"Higher rates will naturally add to the headwinds facing borrowers and the property market but at the same time they are a necessary evil, a key step back to a more normal functioning of the economy and lower inflation.
"The important thing is that the up-cycle, when it does commence, is managed smoothly to avoid shocks and enable the economy, markets and borrowers to adjust."
Showing posts with label Bank of England. Show all posts
Showing posts with label Bank of England. Show all posts
Friday, 9 July 2010
Friday, 25 June 2010
Bank lending steady
British Banker's Association figures (BBA) show UK high street provider's are lending figures remain unchanged since last month.
However the banking sector trade body said the annual growth in the banks' net mortgage lending of 4.3% still substantially exceeds the figure for just 0.9% in April for the mortgage market overall.
Subdued spending has led to consumer credit contracting by 2.5% over the year, it said.
BBA statistics director, David Dooks said:
"High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.
"The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.
"Lending to non-financial companies continues to be slow as demand for loans remains subdued," he added.
According to the figures, the high street banks are currently providing over 70% of approvals for house purchase, compared with around 55% three years ago.
The average value of house purchase approvals, at £150,500, was 10.5% higher than a year ago. Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
However the banking sector trade body said the annual growth in the banks' net mortgage lending of 4.3% still substantially exceeds the figure for just 0.9% in April for the mortgage market overall.
Subdued spending has led to consumer credit contracting by 2.5% over the year, it said.
BBA statistics director, David Dooks said:
"High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.
"The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.
"Lending to non-financial companies continues to be slow as demand for loans remains subdued," he added.
According to the figures, the high street banks are currently providing over 70% of approvals for house purchase, compared with around 55% three years ago.
The average value of house purchase approvals, at £150,500, was 10.5% higher than a year ago. Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Mortgage rates could drop further
The interest rates charged on mortgage loans could fall further this year.
The Centre for Economics and Business Research (CEBR) is predicting a slowdown in UK economic growth as a result of yesterday’s Budget, which it says could result in the Bank of England Base Rate staying at its current level of 0.5% until the end of 2012.
The continuing low Base Rate could prompt lenders to reduce mortgage rates from an average of around 4% to 3% by early next year, according to the CEBR.
The news comes hot on the heels of a report from data website Moneyfacts, which revealed that mortagage rates have fallen to a seven year low.
The average rate on a two-year fixed rate mortgage deal now stands at 4.52%, its lowest level since September 2003.
The cost of fixed rate mortgage deals has been falling since September last year.
Among the best two-year fixed rate mortgages currently available are a deal from The Co-operative Bank at a rate of 2.95% and a deal from HSBC at 2.99%.
Yorkshire Building Society also offers a two-year fixed rate mortgage deal at 3.05%.
The Centre for Economics and Business Research (CEBR) is predicting a slowdown in UK economic growth as a result of yesterday’s Budget, which it says could result in the Bank of England Base Rate staying at its current level of 0.5% until the end of 2012.
The continuing low Base Rate could prompt lenders to reduce mortgage rates from an average of around 4% to 3% by early next year, according to the CEBR.
The news comes hot on the heels of a report from data website Moneyfacts, which revealed that mortagage rates have fallen to a seven year low.
The average rate on a two-year fixed rate mortgage deal now stands at 4.52%, its lowest level since September 2003.
The cost of fixed rate mortgage deals has been falling since September last year.
Among the best two-year fixed rate mortgages currently available are a deal from The Co-operative Bank at a rate of 2.95% and a deal from HSBC at 2.99%.
Yorkshire Building Society also offers a two-year fixed rate mortgage deal at 3.05%.
Wednesday, 9 September 2009
Fixed-rate mortgage costs rise
Interest rates on fixed-rate mortgages are rising despite a falling inter-bank rate, according to Bank of England figures.
The cost of borrowing between banks fell in August, but lenders are not passing on the savings to mortgage customers on fixed-rate deals, figures showed today.
Data from the Bank of England showed the average interest rate charged on a five-year fixed-rate mortgage with a loan to value (LTV) of 75% reached an average 5.72% in August, having dipped to below 5% between January and May.
However, five-year swap rates (the bank-to-bank lending costs on which these deals are based) have seen a significant fall from a recent peak of 3.79% on 7 August to 3.34% at the end of the month.
Interest rates on two-year fixed-rate mortgages with a 25% deposit have remained at 4.42% in August, despite two-year swap rates falling from 2.37% to 1.95% during the month.
This was the fourth month in a row that the cost of five-year fixed-rate deals had risen, and by the end of August average rates on loans were at their highest level since the end of last October. At that point the average deal cost 5.88%, but the base rate was 4.5% compared with 0.5% today.
Banks were quick to pass on higher costs to borrowers in June and July this year when swap rates increased sharply, but falling rates have failed to produce more competitive rates.
Fixed-rate mortgages have grown in popularity as borrowers attempt to control their outgoings and shield themselves from possible interest rate rises. In June, 78% of people taking out a mortgage opted for a fixed-rate deal, the highest proportion in two years.
Critics have accused lenders of profiteering by keeping large margins between their own borrowing rates and those passed on to customers. But David Hollingworth of broker London & Country said that while there were profits to be made a lack of enthusiasm for increasing lending books was a bigger problem.
"I think one of the main reasons fixed rates have been staying put or even becoming more expensive is all tied up in the marketplace we are in," he said. "There is a lack of competition and a lack of lenders in the marketplace, which means there is an imbalance between supply and demand."
He added that many lenders had "at least as many customers as they want to attract" and that there was little enthusiasm for increasing competition as banks are "no longer chasing volume" when it comes to mortgage borrowers.
Hollingworth said only three lenders – Newcastle building society, Britannia building society and HSBC – were now offering five-year fixed-rate deals below 5%.
For both Britiannia and HSBC, borrowers need a deposit of at least 40% to get the rate, while Newcastle's deal is open to people with a 25% deposit.
The cost of borrowing between banks fell in August, but lenders are not passing on the savings to mortgage customers on fixed-rate deals, figures showed today.
Data from the Bank of England showed the average interest rate charged on a five-year fixed-rate mortgage with a loan to value (LTV) of 75% reached an average 5.72% in August, having dipped to below 5% between January and May.
However, five-year swap rates (the bank-to-bank lending costs on which these deals are based) have seen a significant fall from a recent peak of 3.79% on 7 August to 3.34% at the end of the month.
Interest rates on two-year fixed-rate mortgages with a 25% deposit have remained at 4.42% in August, despite two-year swap rates falling from 2.37% to 1.95% during the month.
This was the fourth month in a row that the cost of five-year fixed-rate deals had risen, and by the end of August average rates on loans were at their highest level since the end of last October. At that point the average deal cost 5.88%, but the base rate was 4.5% compared with 0.5% today.
Banks were quick to pass on higher costs to borrowers in June and July this year when swap rates increased sharply, but falling rates have failed to produce more competitive rates.
Fixed-rate mortgages have grown in popularity as borrowers attempt to control their outgoings and shield themselves from possible interest rate rises. In June, 78% of people taking out a mortgage opted for a fixed-rate deal, the highest proportion in two years.
Critics have accused lenders of profiteering by keeping large margins between their own borrowing rates and those passed on to customers. But David Hollingworth of broker London & Country said that while there were profits to be made a lack of enthusiasm for increasing lending books was a bigger problem.
"I think one of the main reasons fixed rates have been staying put or even becoming more expensive is all tied up in the marketplace we are in," he said. "There is a lack of competition and a lack of lenders in the marketplace, which means there is an imbalance between supply and demand."
He added that many lenders had "at least as many customers as they want to attract" and that there was little enthusiasm for increasing competition as banks are "no longer chasing volume" when it comes to mortgage borrowers.
Hollingworth said only three lenders – Newcastle building society, Britannia building society and HSBC – were now offering five-year fixed-rate deals below 5%.
For both Britiannia and HSBC, borrowers need a deposit of at least 40% to get the rate, while Newcastle's deal is open to people with a 25% deposit.
Tuesday, 8 September 2009
Appetite coming back to the mortgage market, says moneysupermarket.com
Consumers have got a fresh appetite for getting into the mortgage market, according to moneysupermarket.com.
Hannah-Mercedes Skenfield, mortgage spokesperson at the price comparison site, made her comments following the release of figures which showed that the number of people looking for a mortgage on the website has gone up by a fifth since January this year.
She suggested that the public may have decided that house prices had stabilised and that it was now time to get on the property ladder while asking prices and interest rates are low.
But she also noted that not all lenders have dropped their interest rates.
"Although many other lenders have barely recognised the dramatic fall in base rates and have kept their mortgage deals relatively expensive there are some good deals to be had."
The figures released by moneysupermarket.com also showed that remortgage searches on its site had dropped by a third at the end of August.
This week, the company pointed out that First Direct's new mortgage products are not quite as positive as they seem because they are directly linked to the Bank of England's base interest rate.
Hannah-Mercedes Skenfield, mortgage spokesperson at the price comparison site, made her comments following the release of figures which showed that the number of people looking for a mortgage on the website has gone up by a fifth since January this year.
She suggested that the public may have decided that house prices had stabilised and that it was now time to get on the property ladder while asking prices and interest rates are low.
But she also noted that not all lenders have dropped their interest rates.
"Although many other lenders have barely recognised the dramatic fall in base rates and have kept their mortgage deals relatively expensive there are some good deals to be had."
The figures released by moneysupermarket.com also showed that remortgage searches on its site had dropped by a third at the end of August.
This week, the company pointed out that First Direct's new mortgage products are not quite as positive as they seem because they are directly linked to the Bank of England's base interest rate.
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