Mortgage Advice Bureau comments on MLAR statistics for Q1 2015

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:

“The mortgage market was lethargic in Q1 2015, with gross advances down more than 10 per cent on the previous quarter. However, the market has since pulled itself out of this slump, with house purchase lending in March up significantly month-on-month*. A favourable economic backdrop means household finances are improving, while the removal of political uncertainty means the market recovery can progress on a smoother course.”

“Consumers are the clear winners of the mortgage price war: average interest rates on all new loans have fallen to their lowest point since the Bank of England began recording this data in Q1 2007. Mortgages have never been so affordable, and this is having a significant impact on borrower behaviour. More borrowers are now willing to move away from the safety of a fixed rate mortgage to take advantage of rock-bottom variable rates, with the proportion of new fixed rate loans falling below 80 per cent for the first time in fifteen months.”

“However, conditions are failing to improve for those who want a high loan-to-value (LTV) loan. Just 3.3 percent of all new gross advances in Q1 2015 were at an LTV of over 90 percent: the lowest proportion since Q4 2013. With no hint of an extension of the Help to Buy guarantee scheme – and house prices continuing to climb – the prospect of having to save for a hefty deposit may leave some borrowers priced out of the market if the availability of high LTV loans does not improve.”