UK property is expensive, mortgage rates fall

The month of may 2013 was a month of the lowest interest rates on mortgages for people buying property in the UK since the financial crisis.

To 3.96% fell an average five-year fixed rate mortgage. This was the first fall below 4%. As a result of the fall, every borrower who takes a loan today, can save over £ 4700 compared to may 2012, when compared with June 2007, the savings would be around £13000.

The average rate on two-year and three-year mortgage products have also reached their lows, reaching respectively 3.82% and 4.13%. Accordingly, rebounded significantly and the proportion of property buyers in UK, buying with a loan at fixed rates – the proportion of such buyers rose from 76% to 92% over the last 12 months.

Data from the National Mortgage Index obtained as the result of a survey of more than 500 brokers and 800 estate agents, showed a change in transactions lending: 89% of transactions was concluded at a fixed rate compared to 72% of transactions in may 2012.

A positive impact on mortgage rates has had, first of all, competition among credit institutions. The competition has had an impact on the ratio of the size of the loan the size of mortgage product, the so-called value LTV (Loan to Value) . Average LTV for buyers in may 2013 was 71.4% , which is 3% higher than at the same time in 2012.

As a result, although collateral requirements on initial Deposit and increased slightly in may 2013 compared with April 2013, the average buyer of real estate in the UK, due to the increase in LTV and accordingly, the reduction of Deposit saved about £1300 on Deposit in may 2013 compared to may 2012.

And this despite the fact that the purchase price was increased by approximately 2.6% for the year to April 2013. That is, the buyer has to borrow £6600 more, buying a house in England in may than in the same period a year earlier.

Thus, the competitive environment among credit organisations have created favourable conditions for property buyers in the UK who got a lot of advantages and was not slow to take advantage of market opportunities.

® Helen Antre 25.06.2013