For the past 12 years, mortgages in the UK have been affordable, with average repayment at just 28 percent of borrowers’ take-home pay, the lowest since 1999. Conversely, 2007 mortgage repayments took up 48 percent of their earnings.
According to Halifax, a mortgage lender, the development pulled average mortgage rates down from 5.84 percent in 2007 to the current 3.85 percent.
Building societies and banks are cutting mortgage rates, as competition in the market heats up. The move has already seen a five-year fixed rate mortgage fall to as low as 3.29 percent.
A standard five-year fixed rate mortgage from the Yorkshire building society and Nationwide building society stands at 3.69 percent each, while HSBC and the Chelsea building society offer five-year fixed rate mortgages each at 3.34 percent and 3.29 percent respectively,
However, some of the more attractive rates were discontinued, with one from the Coventry building society, launched a few weeks ago, having a four-year fixed rate at 2.99 percent.
Home owners may find it more difficult to switch to lower fixed rate deals, as the best deals are open only to those with a large deposit or equity in their homes.
In a week’s time, the Independent Commission on Banking (ICB) is expected to publish its final scheme for boosting stability and competition in the UK banking segment.
The implementation of the recommendations could negatively impact consumers, as they would have to pay more for their loans, including mortgages.
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