Due to a decrease of 4bps over the course of the month the new rate now stands at 3.18%.
The effective rate paid on households’ outstanding time deposits increased by 11bps to 1.92% in October and the rate for households’ new time deposits increased by 4bps to 1.53%.
The rate on outstanding unsecured personal loans decreased by 15bps to 7.23% in October and the new unsecured personal loan rate decreased by 34bps to 7.38%.
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“This morning’s figures show new mortgage approvals dipped in October as extra macro-prudential controls came into play across the market. Higher stress tests and limits on high loan to income (LTI) mortgages are likely to have had a temporary dampening effect on activity. Areas where affordability is most stretched – such as London and the South – will be the first in line to feel the effects of these changes, but overall these measures should ensure a steadier and more sustainable recovery going forwards.
Despite these temporary effects, the overall forecast for consumers remains positive. Current homeowners have been spurred into action by their recent equity gains, with the number of remortgage approvals up 2% since September. Rising house prices mean that many are now better placed to access improved mortgage deals. Meanwhile, all buyers can take advantage of the continuing price war among lenders, which has resulted in historically low mortgage rates. There were also a record number of mortgage products available in October, giving consumers plenty of options to choose from.
Lenders have maintained a strong appetite for business, and current lending conditions are set to bolster consumer demand even further. However, the key focus of affordability remains, and lenders must ensure they continue to put their full weight behind financial assistance schemes such as Help to Buy and higher loan-to-value (LTV) lending to ensure equal opportunities for consumers with smaller deposits.”
David Newnes, director of Your Move and Reeds Rains estate agents, comments: “While the UK housing market has come on leaps and bounds since the recession, mortgage lending is a little more measured than earlier this year.
Help to Buy paved the way for a new march of higher-LTV lending. However, loan-to-income caps are now miring the ground, and there are signs of a retreat in new buyer demand. Aspiring homeowners are also still battling against sluggish wage growth and rock-bottom interest rates to save up for deposits, and stricter affordability measures are discouraging first-time buyers. Already we have seen first-time buyer completions fall back 12.3% over the last three months, and the Government and the Bank of England need to be mindful that further interventions do not to drain more confidence from the bottom of the housing market.”
Richard Sexton, director of e.surv chartered surveyors, explains: “Slow wage growth and low interest rates have made it difficult for borrowers to save for larger deposits. Help-to-Buy had been counteracting this by making it easier to acquire higher-LTV loans. However, the introduction of further regulation in the form of Loan-to-Income caps in early October has taken some of the wind out of first-time-buyers’ sails.
The increasingly rigorous testing may have seemed daunting to prospective homeowners – a negative image has likely had a dampening effect on the real positive influence of MMR and Help-to-Buy. In addition, those who have seen regulation for the vital tool it is have started to buy up the existing stock of starter homes.
It is not enough merely to tinker with the financial conditions of first-time buyers and those that lend to them with schemes like MMR or Help-to-Buy – especially if these necessary checks and balances are misconstrued by the very people they are meant assist. In some areas of the country we’re approaching a situation where if more houses aren’t built, more houses can’t be sold."
