Interest Rate Update to 29 September 2010

UK Interest Rate: 0.5%

UK Interest Rates Forecast: Rates likely to remain low into 2011

Mortgage Approvals Down In August – BoE

The number of mortgage approvals fell in August, according to the latest figures from the Bank of England. Just 47,372 loans for house purchases were approved in August – down around 1,000 from July, when 48,346 new mortgages were approved. More worryingly, both July and Augusts' figures are below the six-month average of 48,619 approvals. This suggests that the seasonal decline of mortgage approvals as we head towards Christmas has set in quite early this year.

Despite the fall in approvals, it is worth noting that the total amount of new lending secured on homes – typically this means mortgage lending – actually increased from July to August. This suggests that money is available to borrow on new mortgages for people who can put together successful property chains and who have big enough deposits to qualify for mortgage deals.

MPC Voted 8-1 to Keep Rates At 0.5%

The minutes of September's Bank of England Monetary Policy Committee meeting have been published. They show that as expected, eight members of the MPC voted in favour of leaving the base rate at 0.5%, while one member, Andrew Sentance, voted in favour of an increase to 0.75%.

Mortgage Rates Remain Low for Those with Big Deposits

UK mortgage lenders continue to offer very low interest rates to borrowers with sufficient deposits. At the time of writing, it's possible to get a variable rate mortgage with an APR of just 2.2% - if you have a 40% deposit.

Borrowers with a 25% deposit and a good credit history should be able to find deals at around 2.65% - but anyone with a deposit of just 10% will be looking at a rate of well over 5.5%, highlighting the importance of a large deposit in the current market.