Mortgage lending hits nine-year high as borrowers snap up deals
Low mortgage rates have encouraged British homeowners to take on the highest levels of fresh mortgage debt since the beginning of 2008.
Official figures from the Bank of England indicate that between July and September 2017, new mortgage debt extended to borrowers was worth £69.6bn.
This 14% increase on the same period in 2016 was likely the result of many households remortgaging to secure cheaper deals ahead of the predicted base rate rise in November. At the end of September, there was almost £1.4trn of mortgage debt outstanding, up 4.1% on 2016 figures, and during October another £23.1bn was lent in total.
“Consumers are increasingly opting for fixed-rate mortgages,” said Philip Shaw, chief economist at Investec, “lighting a fire” under the total value of new lending.
Savvier customers are seeking out cheaper products and avoiding variable rate mortgages, before interest rates increase further.
Borrowers can make the most of the low interest environment
While interest rates have started to increase following November’s base rate rise, two million people are still on their lenders’ standard variable rate. With another base rate rise predicted in 2018, moving to a fixed rate is likely to remain the most popular option as consumers take advantage of the low interest rate environment, but there are some good variable rate mortgages available for those that are seeking flexibility and lower fees.
Mark Bogard, chief executive of the Family Building Society, says lenders are remaining competitive in the current market, with one provider even lowering their standard variable rate.
He added: “As to the future, the market appears to expect another 0.25 per cent increase in May. Personally I wouldn’t be surprised if the next move is a reduction.”
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