The introduction of the Mortgage Market Review (MMR) earlier this year affected many property purchases across the Capital. Tighter lending criteria introduced in April saw banks across the country apply a more in-depth and comprehensive process for applicants, resulting in a far lengthier application process. Combined with more caution from house buyers and uncertainty about interest rates, mortgage approvals have dropped according to the Bank of England (BoE), with the levels in July and August now down 16% compared to January 2014.
For borrowers though, there is good news. The drop in mortgage approvals has prompted competition between lenders. In September 2014, The Mortgage Advice Bureau reported that there are now a record 12,265 mortgage products available, compared to 3,158 in 2009, which shows that products available have more than tripled in just five years. Interest rates are also set to stay low until after the election. As a result, we are seeing some exceptionally good mortgage rates, including a five year fixed rate at just below 3%, which should help to encourage further confidence in the market.
John Phillips, Financial Services Director at KFH, comments: “In July, The Council of Mortgage Lenders revised its UK housing market forecasts for 2014 and 2015. Gross advances are also projected to rise to £208 billion in 2014, compared to £176 billion last year. I anticipate that we’ll see a steady, slow increase of funding in 2015. It is my belief that interest rates will continue to stay low, with a slight increase to the current rate of 0.5% only due in mid 2016. Borrowing money has never been cheaper, so for those who can, the next few months are a good time to agree new mortgage products.”
The surge in available mortgage products combined with such low interest rates provides great motivation for those planning to purchase in the near future. In Greater London however, higher property prices mean that it is increasingly expensive for buyers to get a foot on the ladder. According the Council for Mortgage Lenders, the average age of a borrower in London at 37, is now two years higher than the median age seen across the whole of the UK, while according to the Halifax, mortgage repayments for those living in the Capital account for around 40% of their income.
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