Mortgage Costs at Record Low According to Lenders

Mortgage Costs at Record Low According to Lenders

01 Dec Mortgage Costs at Record Low According to Lenders

According to the Council of Mortgage lenders, mortgages now more affordable than ever before.

An announcement mid November by the Council of Mortgage Lenders (CML) indicated that mortgage costs had reached a historic low in September 2016, meaning good news for property buyers and sellers across East Central Scotland according to local solicitor estate agents. 

The average homeowner in September (excluding 1st time buyers) spent nearly 18% of their monthly income on mortgage repayments according to CML, the main trade body representing UK mortgage lenders.

Eight years previous (2007), they would have spent nearly 24% of their income on mortgage repayments, at a time when interest rates were much higher. These figures from the CML represent the current historic low which should now help more people to purchase their own home.

Low Rates

The majority of household income being spent on repayments was higher in the 1970s and 80s, when interest rates were as high as 17% a year, according to the CML.

The Bank of England’s decision to cut base rates to 0.25% in August, has improved the affordability as it has resulted in a high proportion of lenders cutting mortgage rates further.

Many lenders even offering two-year fixed rates for as little as 0.99%.  “Mortgage affordability reached an historic low in September, for both first-time buyers and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut,” said Paul Smee, the director general of the CML. “This should help turn strong appetite for home-ownership into a reality as we approach the closing months of the year.”

Loans for homes have never been more affordable, so it really is a sellers’ market at present, as seen in our recent property market update.  Demand for property is high and selling times as reported by the ESPC from July to September 2016, was down from 36 days to 24 days compared with the same period the previous year. This equates to a reduction of property selling time of 35%.

However, Donald Trump’s victory last month may mark a turning point for the lowest fixed rate offers. Fixed rate prices depends on which deals which lenders can negotiate in the City, called swap rates. Swap rates – which were already creeping up – have leapt since Trump’s triumph. It’s part of a dramatic shift in expectations about interest rates, if the President-elect delivers on his promise to double the growth rate of the US economy.

People are predicting much higher US rates in the long run, with a knock-on effect across the world. Mortgage experts here are talking about increases of around 0.25% in five- and 10-year fixed rates over the next few weeks, with more rises predicted to follow.

House price rises mean the total value of loans has risen dramatically over the last few years.  Separate figures from the Office for National Statistics, released last week said that the average UK house price rose by 7.7% in the year to September, unchanged from the previous month.

Buyer demand remains extremely high as we approach the end of 2016, with a combination of mortgage availability and seasonal dip in the number of properties coming to the market, meaning that the market remains highly competitive. Great news for property sellers who will experience less competition from other, similar properties on the market.

If you are thinking of putting your property on the  market and require a Home Report to be carried out, get in touch with us at or call us on 0131 608 0175. We offer competitive prices and are flexible when it comes to appointments, offering early morning, evening or weekend slots.


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