The number of mortgages approved by British lenders slid to a seven-month low in April, new figures show.
This news comes despite the fact that mortgage lending rates are fast approaching record lows, as lenders look to entice buyers back into the market.
New Bank of England figures show that banks and building societies approved 64,645 mortgages in April, slipping from a downwardly revised 66,043 in March.
The fall in mortgage approval rates has been attributed to an overall slowdown in the UK property market since Brexit, especially in London and the South. However, in spite of the fact there have been fewer house sales, there has not been widespread falls in house prices that some commentators had predicted.
Perhaps to encourage more British buyers to enter the market, many lenders are currently offering fixed mortgages at extremely low rates.
In fact, separate Bank of England data shows that the average rate of popular two-year fixed rate mortgages was 1.26 per cent in April, down from 1.73 per cent a year ago. In fact, Yorkshire Building Society recently introduced fixed-rate mortgage rates under 1 per cent – the first lender to dip below this figure, with more likely to follow. Santander and the Nationwide, Britain’s biggest building society, have also cut their rates in recent weeks.
However, estimates suggest up to 40 per cent of current homeowners with an outstanding mortgage are on their lender’s standard variable rate – typically around 4.75 per cent.
What’s more, recent research by mortgage broker Trussle claims only 6 per cent of borrowers have considered switching to a better rate since the Bank of England cut the base rate to 0.25 per cent in August last year.
When asked what had stopped them from switching, one in five said the process would be ‘too much hassle’, while 14 per cent said ‘it all seemed too complicated’.
Two-year fixed rate deals are the most popular type of mortgage products, with 48 per cent of new borrowers taking up this option.
Article published 2nd June 2017