Interest rates decrease allowing more successful mortgage deals
Throughout 2007, mortgage affordability was a major issue. The CML feel that the two base rate reductions since December has helped ease debt to the lowest yet. Borrowers are looking for cheap mortgage deals everyday, with interest rate cuts, this will enable more successful applications.
Lending for house purchase went downwards during 2007, loans dropped by almost 10 per cent to one million. It seems possible that this has been pretentious by a series of factors, including the new Home Information Pack.
Analysing this criteria, CML director Michael Coogan spoke further in relation to this matter: “The decline in lending appears to be driven more by funding constraints than lower consumer demand. Affordability has been stretched further in 2007 but the recent base rate cuts. The impact of payment shock on the large numbers of borrowers coming to the end of fixed rate mortgages will also be less than we anticipated last year.
“For first time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease slowly as the year progresses.”
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