Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“There is clearly strong appetite for new business among lenders, with the Bank of England’s data showing gross advances were over a fifth higher in Q4 2015 than a year earlier. Borrowers are also benefiting from lower mortgage rates, with the average rate at the lowest point since the Bank of England began recording this in 2007. Low rates ease the burden of repayments, making now a great time to get a mortgage for those who already have a deposit saved.
“The base rate has now been at 0.5 per cent for seven years, meaning many recent borrowers have never experienced an increase in their monthly mortgage rate. However, borrowers are still opting for the security of locking into rock-bottom rates before they disappear, with the proportion opting to fix rising by over 3 per cent in the final quarter of 2015.
“Borrowers who haven’t yet managed to save for a deposit may face more difficulties. The number of loans with a higher loan-to-value (LTV) ratio has been declining – meaning borrowers have to raise larger deposits in order to access the housing market. With prices continuing to rise, it is important that homeownership is supported through the provision of higher LTV products. It is positive to see that lending to first-time buyers has increased over the last 12 months however, and the Government has shown its willingness to support aspiring homeowners through affordability schemes such as Help to Buy.”