Mortgage News
May brings lowest five-year fixes since 2007
May was the cheapest month for fixed rate mortgages since the credit crisis began with the average five-year fix at 3.96%, and the numbers of borrowers choosing fixed rates also at a 92% high.
In a flurry of optimistic news, an index from mortgage adviser the Mortgage Advice Bureau (MAB) also showed mortgage product numbers are up, high LTV lending is rising and more borrowers are looking to buy a new home.
This is the month the average five-year fixed rate for the month dropped below 4% for the first time since MAB’s records began in June 2007.
The difference adds up to a fixed term saving of over £4,700 for any borrower who took out the average five year fixed mortgage in May compared with May 2012 – and a saving of over £13,000 compared with June 2007, said MAB.
The Council of Mortgage Lenders also reports today that mortgage lending leapt to a 5 year high in May.
Average two and three year rates also hit record lows in May 2013 at 3.82% and 4.13% respectively.
Your First Home: confidence to build
Sponsored by Halifax Intermediaries
Remortgagors are also choosing fixed rates with 89% opting for the deals in May 2013 against 72% in May 2012.
Homebuyers are back out again in force, with activity up by 43% year-on-year, against a 20% increase in remortgage applications.
Almost three quarters of all mortgage applicants were potential buyers in May at 74% up from 71% in May 2012 as the growing momentum behind the Help to Buy scheme fuels a surge of consumer interest in house purchases.
The typical home buyer therefore applied to borrow £6,600 more for their mortgage in May 2013 than the same time last year.
Equally, over two thousand more products were available last month compared with May 2012 (9,658 vs. 7,553), which is close to a record high.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “As recently as two years ago the idea that five year fixed rates would average less than 4% was absurd. Now we’re looking at a situation where five year rates have fallen every month this year and product numbers keep on climbing as lenders compete for business across the LTV range.
“Current activity is especially strong in the new build sector where Help to Buy is providing an answer for many buyers with limited deposits. Competition is set to get more intense over the summer as more lenders spot the potential for growth in the market for new build properties.”