The U.K. mortgage rates have declined unexpectedly, according to the British Bankers' Association (BBA) . The bad weather in January 2013 may partly be the culprit. The Association also added that overdraft and loan repayments exceeded fresh loan applications and borrowings.
Total mortgage Approvals went down to 32,288 in the month of January, 2013 from the recorded 33,440 in December. The approval rates were forecast to go up to 34,000. However, the market has been subdued due to the severe weather in the country. Demand for personal loans and securities have also remained low throughout the month, reports RTT News.
"January's severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses. While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer." David Dooks, BBA statistics director, said to BBC.
Remortgaging activity was also weak in the country as it had dropped down to 24 percent in 2012 from 51 percent in 2008. Though there was a slight increase of 7 percent in the remortgaging activity in the latter half of 2012, total rates were12 percent lesser than the percentage of 2011, reports Property Wire.
The current scenario is in complete contrast to the data accounted in the past few months. The mortgage market had picked up speed in the past few months as more buyers were eager to apply for mortgage loans
Mortgage rates were kept at record lows. The cost of a two-year fixed rate loan had stooped down notably with major banks offering rates starting at 1.99 percent. Banks also came up with lucrative schemes to lure and encourage first-time home buyers.
However, good times are expected to ring in once the winter fades away. The market has already been showing some positive signs. Home prices also hit a record five year high as more number of sellers increased property prices in sight of a housing boom.
