LONDON (Reuters) – The cost of taking out the most popular type of fixed-rate mortgage fell last month for the first time since February, Bank of England data showed on Monday. The drop is welcome news for homeowners who had seen the cost of mortgage finance rocket to an eight-year high, but analysts cautioned that it was too soon to say the credit squeeze was loosening its grip.
"Rates have fallen but they are still very restrictive given the current macro-economic backdrop," said Lena Komileva, a market economist at Tullet Prebon.
Figures from the central bank show the typical rate on a new 75 percent loan-to-value mortgage, fixed for two-years, fell to 6.36 percent from 6.6 percent in June.
The rate on a 75 percent loan-to-value mortgage fixed for 10 years fell to 6.43 percent from 6.46 percent in June.
Swap rates, which underpin the cost of short-term fixed lending, have dropped sharply over the past month as falling oil price have encouraged speculation that interest rates will eventually be cut.
Money market rates show the Bank of England is likely to hold interest rates at 5.0 percent for several months, but cut them to 4.5 percent by the middle of next year.
Alan Clarke, an economist at BNP Paribas, said the fall in fixed mortgage rates would provide some relief to the thousands of homeowners whose existing fixed-rate deals were about to expire, but doubted it would do much to entice first-time buyers.
"This is the first bit of helpful news for a while but it comes on the back of a sizeable upward shift the prior month, so rates are still higher than two months ago," he said.
"If reports are correct that potential buyers are sitting on their hands in anticipation of possible stamp duty freezes, then to some extent it is academic what the cost of a two-year fixed rate is — new buyers are holding fire."
What Are Cookies
As is common practice with almost all professional websites, our site uses cookies, which are tiny files that are downloaded to your device, to improve your experience.
This document describes what information they gather, how we use it and why we sometimes need to store these cookies. We will also share how you can prevent these cookies from being stored however this may downgrade or ‘break’ certain elements of the sites functionality.
How We Use Cookies
We use cookies for a variety of reasons detailed below. Unfortunately, in most cases there are no industry standard options for disabling cookies without completely disabling the functionality and features they add to the site. It is recommended that you leave on all cookies if you are not sure whether you need them or not, in case they are used to provide a service that you use.
The types of cookies used on this website can be classified into one of three categories:
- Strictly Necessary Cookies. These are essential in order to enable you to use certain features of the website, such as submitting forms on the website.
- Functionality Cookies.These are used to allow the website to remember choices you make (such as your language) and provide enhanced features to improve your web experience.
- Analytical / Navigation Cookies. These cookies enable the site to function correctly and are used to gather information about how visitors use the site. This information is used to compile reports and help us to improve the site. Cookies gather information in anonymous form, including the number of visitors to the site, where visitors came from and the pages they viewed.
Disabling Cookies
You can prevent the setting of cookies by adjusting the settings on your browser (see your browser’s “Help” option on how to do this). Be aware that disabling cookies may affect the functionality of this and many other websites that you visit. Therefore, it is recommended that you do not disable cookies.
Third Party Cookies
In some special cases we also use cookies provided by trusted third parties. Our site uses [Google Analytics] which is one of the most widespread and trusted analytics solutions on the web for helping us to understand how you use the site and ways that we can improve your experience. These cookies may track things such as how long you spend on the site and the pages that you visit so that we can continue to produce engaging content. For more information on Google Analytics cookies, see the official Google Analytics page.
Google Analytics
Google Analytics is Google’s analytics tool that helps our website to understand how visitors engage with their properties. It may use a set of cookies to collect information and report website usage statistics without personally identifying individual visitors to Google. The main cookie used by Google Analytics is the ‘__ga’ cookie.
In addition to reporting website usage statistics, Google Analytics can also be used, together with some of the advertising cookies, to help show more relevant ads on Google properties (like Google Search) and across the web and to measure interactions with the ads Google shows.
Learn more about Analytics cookies and privacy information.
Use of IP Addresses. An IP address is a numeric code that identifies your device on the Internet. We might use your IP address and browser type to help analyze usage patterns and diagnose problems on this website and to improve the service we offer to you. But without additional information your IP address does not identify you as an individual.
Your Choice. When you accessed this website, our cookies were sent to your web browser and stored on your device. By using our website, you agree to the use of cookies and similar technologies.
More Information
Hopefully the above information has clarified things for you. As it was previously mentioned, if you are not sure whether you want to allow the cookies or not, it is usually safer to leave cookies enabled in case it interacts with one of the features you use on our site. However, if you are still looking for more information, then feel free to contact us via email at [email protected]