Mortgage rate war slows in August

Sarah Davidson

September 25, 2015

Figures from Your Move and Reeds Rains suggested that while the figure represents a 0.85 percentage point decrease on August 2014 and a 0.1 percentage point fall on May 2015, it represents only a negligible 0.08 percentage point decrease on last month’s average rate.

However, the average loan-to-value ratio is holding steady with August’s LTV of 82.6% up 0.4 percentage points from August 2014’s figure of 82.2%.

Alongside this, data from the latest Mortgage Monitor from e.surv revealed that the number of high LTV loans in August increased by 7.5% compared to last month and by 13.7% compared to May.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said: “Rising deposit costs and average house prices – while hardly a first-time buyer dream – are encouraging economic signs.

“They point to rising real-terms pay and overall consumer confidence. Similarly, first-time buyers may grumble about the Bank of England sending out increasingly firm signals that a rate rise is on the horizon.

“But we are not there yet – the average mortgage rate is continuing to fall, albeit at a more cautious pace than in recent months – and the number of high LTV loans available is still on an upward trajectory.

“This means it is an opportune time for first-time buyers to bid farewell to renting and get a place of their own.”

The research also suggested the number of first-time buyer sales in August leapt by over a quarter compared to May.

August saw 30,200 completed first-time buyer transactions, compared to 23,700 in May – an increase of 27.4% on a 3-month basis and means that 6,500 more first-time buyers completed property transactions in August than in May.

On a monthly basis, first-time buyer transactions matched July’s total of 30,200 sales, meaning that completed transactions are still at their highest level since August 2007, a post-recession high for the second month running.

This makes the June to August period the strongest summer in eight years, with 89,800 transactions being completed by first-time buyers. By contrast, during the same summer period last year only 84,900 sales were completed.

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