CML comments on Bank of England mortgage data

Commenting on today's mortgage data published by the Bank of England, the Council of Mortgage Lenders notes that interest rates on new mortgages continue to fall, while the average rate on the outstanding stock is stable.

CML senior economist Paul Samter observed:

• The average rate on mortgages advanced in February fell to 3.83%, from 3.90% in January, and has declined each month from 4.34% last August. The largest falls have been on shorter-term fixed rates. The average rate on all outstanding loans was unchanged at 3.67% in the month. This is slightly higher than the low of 3.56% in October, but still extremely low on any historic comparison and is likely to help keep arrears rates relatively low.
• Approvals for house purchase fell a little to 47,100, down 2% on the month, but up 20% on a year earlier. This is very much in line with the CML forecast for activity to remain subdued early in the year in light of the rush to beat the end of the stamp duty holiday late last year, and uncertainty over the economic and political outlook. The new stamp duty exemption for first-time buyers on properties up to £250,000 is likely to boost activity in the coming months, although it is extremely difficult to assess how many potential buyers will qualify and what the impact will be.
• Remortgage activity picked up a little, with 27,300 loans approved in the month, a 12% rise from January but down 21% on a year earlier. The CML continues to expect refinancing activity to remain subdued throughout most of this year with official interest rates (and therefore most variable mortgage rates) unlikely to rise for some time yet.
• Gross lending came in very close to the CML's £9.2 billion estimate at £9.3 billion (nsa) while net lending, on an unadjusted basis, was in modestly negative territory in the month – however, the seasonally adjusted figure was £1.6 billion, a similar level to that seen in recent months.