(UK) Homebuyer loans hit 22-month high

[denem]

Source: Financial Times

The number of mortgages provided to homebuyers has reached its highest level for 22-months, according to the Council of Mortgage Lenders (CML)...

Remortgaging activity has fallen significantly as a result of low interest rates, providing borrowers little incentive to refinance their loans.

The number of first-time buyer loans has increased 34 per cent to 19,700 since October 2008.

The CML said borrowers continue to take out tracker rates because they have a greater expectation that interest rates will stay at, or near, their current low for a while to come.

It said 21 per cent of all new loans advanced by lenders were tracker mortgages.

Read more: http://www.ft.com/cms/s/2/b20c7f42-e57d-11de-81b4-00144feab49a.html

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And so it begins. Again. The same mistakes; the same profound stupidity, on both sides. Why bother to refinance or lock in, when the outlook is so 'attractive'. Good cheap variable rates that buyers can easily afford. Might as well go for more up market housing too. :sarcasm: While the UK economy is still going backwards, bail out payments fund the next bubble.

[geckosfeet]

1. Please fix the link. Also - lower rates favor refinancing.

Or does that second sentencerefer to the lending institutions not wanting to refinance for mortgage holders?

If my lender refused to refi my mortgage I would go somewhere that wanted my business.

[denem]

2. The link works for me. Refinancing here (usually) means going from a variable to fixed rate.

Variable rate mortgages are more popular outside the US.

I've tested the link with everything except IE.

[geckosfeet]

3. Hmm. Does not work for me. Try using the wiki [link:|] format. Click the html lookup link

Click the html lookup link in edit view for details.

Generally, pasting a link into your post is not the best procedure.

That is interesting - in the US most people refi in order to take advantage of lower interest rates. They go from variable rates that are starting to balloon or higher fixed rates to either a lower fixed or variable rate. Most lenders agree to refi consumer mortgages for fear of losing the loan to a competitor.

[muriel_volestrangler]

4. The point is that variable rates are low at the moment

and so people either already on the variable rate, or who switch back to the variable rate after a prior fixed rate deal expires, are actually happy with the variable rate.

You can see some examples of 'good rates' here: http://www.fool.co.uk/remortgages/remortgages.aspx

For example, a fixed rate of 4.89% for just over 5 years, versus the bank base rate (which is currently 0.5%) + 2.44% for the full term of the mortgage. The fixed rate one does need a smaller deposit (20%, v. 25%), but it has a stiffer early repayment fee - 3% v. 1%. The homeowner could save that 1% fee on the tracker mortgage in the first year, during which the base rate is almost certain to stay low. It looks like a reasonable decision to use the tracker mortgage, to me.

[denem]

5. OK Try this:

http://www.ft.com/cms/s/2/b20c7f42-e57d-11de-81b4-00144feab49a.html">Homebuyer loans hit 22-month high

[geckosfeet]

6. Thanks. Works.

Guess that makes sense if everyone that is eligible has already refinanced. I refinanced about 6 months ago. Can't imagine rates going lower than my current 4%.