Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“While mortgage lending was sluggish in the final quarter of 2014 – when gross advances fell 8.1% compared to the previous quarter – the market is geared towards greater activity in 2015, particularly in terms of consumer demand. The average interest rate on total amounts outstanding has fallen to its lowest point in over seven years, and consumers continue to be the winners of the mortgage price war.
“In a low rate environment – and with a base rate rise pushed further back on the horizon – borrowers are increasingly willing to take on variable rates, with the proportion of advances at fixed rates falling for the first time in over two years. However, rates will eventually hit the bottom of the curve so timing is crucial: failure to lock in to today’s record low rates could prove costly in the long-term.
“Mortgage affordability is certainly swinging in consumers’ favour. However, for those with small deposits, there is definite room for improvement. The proportion of gross advances at a loan-to-value (LTV) of over 90% fell to just 3.8% in Q4 2014. While the Help to Buy scheme has helped to prop up higher LTV lending, it continues to be underrepresented in the market. More lenders need to expand this area of lending to ensure the housing ladder is not out of reach for lower income first-time buyers.”