CML figures for July show increase in fixed-rate mortgage deals |
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Fri, 19 Aug 2005 16:05
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LONDON - The July data from the Council of Mortgage Lenders (CML) shows that consumers are increasingly hedging their bets on fixed-rate deals as opposed to flexible ones. The average price of the fixed-rate loans has dipped for the ninth month running and people are taking advantage of these more affordable rates to fix up their mortgages at convenient prices.
The CML data also showed that the fixed rate for July stood at 5.31 percent as against the 5.36 percent in the previous month. Additionally, mortgages taken out on a fixed-rate basis rose to 50 percent in July form 47 percent in June. The CML revealed that this was the highest proportion of fixed rate mortgages since December 1998. Variable rate deals did not fare any better in July with the rates falling to 5.68 percent from 5.76 percent in June.
Gross mortgage lending registered a 2 percent dip in July to £25 billion. This figure is 13 percent lower than it was at the same time a year ago. Lending for house purchases fell to £11.8 billion in July from the £12 billion in June. This figure is around 19 percent lower than what was recorded a year ago during the same period. The CML's director general, Michael Coogan observed that the July figures reiterated the notion that the housing market was actively stabilizing, "The recent 0.25% cut in interest rates by the Bank of England should help ensure that this stability continues over the coming months by giving a much needed boost to consumer confidence about future interest rates. Our recently published forecasts predict a steady housing market in the next couple of years, and so we expect to see similar levels of lending in the coming months," he said.
The British Banking Association (BBA) said that these figures meant that consumers had taken a wait and watch approach, "July's growth in lending to individuals slowed from the recent trend. This could have reflected, in the case of mortgages, consumers waiting for the widely anticipated cut in interest rates in August," said David Dooks, the BBA's director of statistics.
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