Record low borrowing costs and competition between banks led to a rise in mortgage lending from April to June, figures released by the Bank of England and Financial Conduct Authority showed yesterday.
The total value of mortgages advanced was £52.5bn over the period, a 15.1 per cent jump on the same time last year.
The average interest rate edged down to 2.83 per cent from 2.99 per cent in the first three months of the year. It was the lowest average rate of interest since the series began seven years ago.
“This improved affordability has caused a rush of demand from borrowers, and lenders are locked in fierce competition to win their business,” said Brian Murphy, head of lending at the Mortgage Advice Bureau, a brokers.
More people chose to lock in fixed- interest rates that will not go up even if the Bank of England hikes its base rate.
The proportion of mortgages granted that came with a fixed interest rate edged up to 78.9 per cent from 77.6 per cent in the first three months of the year.
“Borrowers are increasingly aware that these cut-price rates only have a limited lifespan, particularly as we edge closer to an interest rate rise,” Murphy said.
There was some bad news for those who are looking to get on the first rung of the property ladder. Mortgage advances to first-time buyers totalled only £10.8bn from April to June, down from £11.4bn in over the same time last year.
Banks also reduced the amount of high loan-to-value mortgages they granted. This has been in decline since banks were made to do thorough affordability checks on borrowers to make sure they could afford mortgage repayments if interest rates went up.