The findings come from the Bank’s latest Credit Conditions Review, which assesses the market’s latest trends using data such as financial and monetary statistics gathered by the Bank and discussions between Bank staff and the UK’s major lenders. The findings cover the three months to the end of August 2015.
According to the report, lenders said decisions to cut mortgage rates over recent months were down to increasing competition, but also to intermediaries’ growing share of the market. As brokers continue to dominate the market and search for the best customer deals, lenders have felt the need to cut headline rates to meet this demand.
Rates on higher loan-to-value (LTV) mortgages fell markedly in the three months to August 2015, the Bank found.
Despite the growing number of products advertised at 90-95% LTV continuing to rise, lenders reported that their willingness to lend at LTV ratios higher than this was unchanged.
But while higher LTV mortgage rates increased over this period, rates offered to borrowers on lower LTV fixed-rate mortgages stabilised over the same period, with the average rate unchanged.
Another area of the market experiencing high demand was secured lending, with the effective rate for new mortgages 11 basis points lower than the three months previous.
Lenders reported a significant increase in demand for secured lending for house purchases, while secured credit for remortgaging purposes also saw an increase, albeit to a lesser extent. However, it was the upward change in demand for secured loans for buy-to-let borrowing that was particularly prevalent, according to lenders.
In terms of general house purchase loans, mortgage approvals continued to rise to total 71,030 in August, with approvals for remortgaging also increasing.
