Drop in mortgage rates is a sign of confidence
October 21, 2009
Mortgage lenders across the U.K. are likely to drop their rates in a reaction to the Woolwich announcement that it would be knocking 0.6 percent off some of its mortgages. Some see the move as a sign that the housing market is finally coming out of the doldrums of the recession and should see banks and mortgage lenders lower rates further in an attempt to win custom from more confident house buyers.
A rise in the number of people applying for mortgages is a good sign for lenders. This year saw a third-quarter rise in the amount of money being lent to customers of 18 percent on the previous three month. The total amount given out was £38.9 billion.
Experts say that the mortgage companies who had found it tough during the recession tended to keep rates high so as to lower the risk they were taking. Now those lenders are beginning to feel more confident and rates are starting to fall. However some say that it will take some time for the market to get back on its feet properly because whilst rates may be dropping the criteria for people who are receiving loans is still tight.
The Woolwich rate drop of 0.6 percent is the fourth cut the lender has made over the past two months.
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