Figures released by the BBA last Friday showed that 34,813 home buyer mortgages were approved in June. That was a drop of just under 4.5% (1,605) on the number approved in May. Approvals for remortgages and equity release remained reasonably the same as in May.
Weak demand and the lack of contractor mortgage funding are still weighing down the housing market but David Dooks, the BBA’s statistics director, said that the abolition of HIPS and an increase in sellers is expected to encourage market activity.
An economist at IHS Global insight thinks that we’re likely to see further falls in house prices in the second half of this year and it’s highly likely that prices will continue to drop by as much as 5% and 10% next year.
Meanwhile, homeowners are being advised to make larger mortgage repayments while interest rates remain low. According to the CML, mortgage interest payments now take up just 9.5% of income, the lowest since records started 35 years ago.
The Bank of England has held the base rate at 0.5% for the past 16 months but borrowers feel that that situation will change soon. In anticipation of this, a lot more people are now choosing fixed rate deals. 72% of all applications last month were for fixed rate mortgages as opposed to just over 50% in January.
Early repayment penalty charges do put some people off making one-off or increased monthly payments but homeowners with a fully flexible mortgage can make additional repayments without incurring these charges.
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