Average mortgage rate falls to its lowest since December 2009
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Countrywide says the average rate of the top 10 most popular mortgages it sold in May fell to 4.37%, the lowest average since December 2009.
The findings which are based on the activities of more than 700 mortgage consultants, and were a fall of 0.20% from April 2010.
In May 2009 the average interest rate of Countrywide’s top 10 products was 0.96% higher at 5.33%.
Overall, year-to-date applications saw a 4% increase compared to the same period in 2009, while applications fell by 8% in May 2010 on the previous month.
The number of new mortgage products available increased by 8.8 % in May compared to the previous month - a 172 % increase since May 2009.
Fixed rate mortgages made up 65% of all new applications in May, an increase of 5% from April 10, as customers look to give themselves certainty. Applications for both buy-to-let and remortgage products also increased by 3% and 4% during the same period.
The type of mortgages being chosen by customers has shifted dramatically over the last year. Tracker mortgages made up 3% of all applications in May 2009 and jumped to 47% in December 2009 before falling to 35 % in May 2010 – the same month that inflation reached a 17-month high.
The news comes in the same month that Home Information Packs were suspended, with Countrywide’s 1,200 offices reporting 34 % increase in properties entering the market.
Grenville Turner, group chief executive at Countrywide, says: “The next few months will be telling. Recent activity levels clearly demonstrate that we are some way off from seeing application volumes reach pre recession levels but they are slowly recovering in line with the housing market.
“There is a better dynamic in the market with more applications converting to actual mortgages. It has also been encouraging to see some lenders slowly continue to reduce interest rates and this can only help the growing number of homeowners entering the market after the suspension of HIPs.
“However, the rising popularity of fixed rate products highlights that consumer confidence is fragile ahead of the government’s emergency budget, which looks set to reveal further spending cuts.”
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