Interest Rate Update 9 November 2011

UK Interest Rate: 0.5%

UK Interest Rates Forecast: Mortgage rates low but Euro turmoil threatens rises

Mortgage Approvals Down In September

The number of mortgage approvals fell in September, according to Bank of England data. The overall fall reflected a fall in mortgage approvals for house purchases, which fell from 52,347 in August to 50,967 in September.

Remortgaging approvals rose slightly from 34,726 in August to 34,924 in September, as homeowners continued to secure new fixed rate and tracker deals in anticipation of future mortgage rate rises.

Average Mortgage Rates Up In October?

The average mortgage rate for an existing mortgage fell from 3.41% to 3.36% in September, according to the Bank of England. The average rate for a new mortgage deal also fell, from 3.58% to 3.51%.

However, new figures from the Bank of England show that average mortgage rates may have risen slightly in October as a result of the recent Eurozone crisis and the resulting market volatility.

The average rate on a 2-year fixed deal with 25% deposit rose from 2.92% to 3.04% in October, while the rate for an equivalent 3-year deal rose from 3.58% to 3.63%.

Survey Shows 60% of Homeowners Could Save By Remortgaging

A new survey by a major mortgage lender has found that 60% of homeowners have never remortgaged other than when they moved home, thinking that the benefits would be to small to be worth the hassle.

In fact, the opposite is true, especially now, when so many homeowners are on their lenders' Standard Variable Rates (SVR). SVRs vary widely between lenders and the survey found that homeowners could save an average of £1,200 per year by remortgaging.

Louise Holmes, spokesperson for Moneyfacts, commented that "Lenders have begun to launch more competitive products to borrowers who during the height of the credit crisis had pretty much given up on the prospect of owning their own property."