Mortgages hit a "historic low", say CML

Mortgage costs reached a “historic low” in September according to Council of Mortgage Lenders (CML) as interest rates fell after the Brexit vote.

Home movers and first-time buyers benefited after the Bank of England cut the base rate of interest to 0.25% in August amid fears that the economy would decline after the referendum result.

Following the base rate cut, many lenders lowered their mortgage rates further with two-year fixed rates now available for as little as 0.99%.

As a result, the average home owner spent 17.7% of their monthly income on mortgage repayments in September compared to 23.7% eight years ago.

For first-time buyers the figure was 17.8%, compared to 24.7% in November 2007.

CML’s director general Paul Smee said low rates “should help turn strong appetite for home ownership into a reality as we approach the closing months of the year".

Rising house prices have however raised the total value of loans by a substantial amount over the last few years.

Average house prices rose by 7.7% in the year to September according to the Office for National Statistics (ONS).

This was reflected in CML’s figures as homeowners borrowed 4% more year-on-year, reaching a total of £11.4bn during the month.