Interest Rate Update to 24 November 2010

UK Interest Rate: 0.5%

UK Interest Rates Forecast: No change likely in the next six months

Mortgage Approvals Hit New Low

Mortgage lending is continuing to fall, according to the latest figures from the British Bankers' Association.

Just 30,776 mortgages were approved in October – a fall of more than 25% on October 2009 and the lowest level for 19 months. New residential mortgage approvals were also slightly lower than in September.

Gross mortgage lending (the total amount of money lent on mortgages) continued to fall in October and was 16.1% lower than in October 2009, reaching the lowest level since February 2001.

Net mortgage lending (the amount lent after mortgage redemptions and repayments have been subtracted) did increase slightly and was up 3.5% on this time last year in October. However, looked at on a month-by-month basis, the increase in net mortgage lending in October was 43% less than the increase in net mortgage lending seen in October 2009.

Mortgage Rates Still Being Cut

At least one major UK mortgage lender has cut its interest rates this week, dropping the rate on a two-year fixed rate deal with a 10% deposit by 0.4%. Deals such as this are aimed at first-time buyers and offer some of the highest loan-to-value (LTV) ratios on the market.

Remortgaging Up In October

Remortgaging rose slightly in October, with 24,112 remortgaging deals approved, according to the latest figures from the British Bankers' Association. This is above the average for the last six months and suggests that many homeowners are securing their mortgage deals while rates remain low and have no plans to consider moving house in the near future.