“Borrowers can now snap up some of the lowest mortgage rates on record,” says Hamptons, and it’s the top-end of the market that’s seeing the benefit.
While activity levels across the property market are still well off the pre-crash pace, “there are some signs that things may be beginning to improve,” notes the agency in its latest Market Insight report. Mortgage approvals increased for the second consecutive month in January, and December’s SDLT reform delivered a push to transaction numbers in the mainstream market.
But it’s falling mortgage rates that are driving the more expensive end of the market, as the official interest rate stays put at just 0.5% – where its been for the last six years – and the consensus is that the Bank of England is likely to keep it there for longer than previously thought, probably until 2016; there’re even some whispers of a fall…
“This combined with increased competition among banks and building societies, means that borrowers can now snap up some of the lowest mortgage rates on record,” argues Hamptons.
The mainstream market is still being throttled by affordability, though, which means that the top-end is where low mortgage rates are being enjoyed the most. This is borne out by the fact that the average value of mortgage approvals has been increasing faster than the average house price.
“Wealthier borrowers with sufficient equity have the opportunity to borrow at historically low rates and with fewer buyers in the market there are deals to be made,” says Hamptons. “And that is the key to unlocking liquidity in the market – at all price levels.”
Read the full report here (PDF)