Mortgage interest rates plunge to new low during February

Ben Southwood
Follow Ben
MORTGAGE interest rates continued to fall in February, with many fixed rates plummeting to their lowest ever levels.

The average quoted rate for a two year 75 per cent loan-to-value (LTV) mortgage was 2.87 per cent in February, the Bank of England (BoE) revealed yesterday, down from 3.07 per cent the month before.

It was also the lowest result seen since the measure was first recorded in January 1995, when the rate stood at 8.13 per cent.

Funds were cheap at the bottom end of the market as well – those with deposits of only a 10th, needing two-year 90 per cent LTV mortgages faced a 4.57 per cent rate, also the lowest ever recorded.

And the rates on three and five-year 75 per cent LTV mortgages also crashed to all-time lows last month, the BoE figures showed.

These lower rates went in line with a £1.5bn boost to net lending to individuals, the Bank said; £12bn gross mortgage lending, adding £0.9bn to the total pool of credit secured on dwellings, despite a fall in the total number of home loans secured.

Melanie Bowler at Moody’s Analytics said the reinvigorated housing boom could pick up even further, with more quantitative easing expected from the BoE, along with the government’s existing Funding for Lending Scheme and the introduction of the Help to Buy mortgage guarantee policy.

“Secured lending is expected to increase through the course of 2013,” Bowler said.