The economy of UK returned in growth during the 3rd quarter of 2012, it bucked the trend set over the previous 3 quarters. However, it wasn’t good news all round as number of sectors, notably construction and manufacturing still continued to struggle.
This August the “Funding for Lending” scheme was introduced, wherein potential homebuyers are encouraged to lend, resulting to a positive impact on the market as lenders continue to thrust for business. Average mortgage pricing fell with both 2 and 3 year fixed products, with 5 year raters unchanged from October.
When viewed as a single figure, these reductions in average are modest as recent overall trend show interest rates on 2 year fixed deals declined in each of the last 5 months, while 3 year fixed rates have fallen in each of the last 3 months.
Bank rate reports: “The benchmark 15-year fixed-rate mortgage fell to 3.61 percent this week, compared to 3.62 percent last week, and the benchmark 5/1 adjustable-rate mortgage rose to 3.61 percent from 3.53 percent. The benchmark 30-year fixed-rate jumbo rose to 4.73 percent from 4.68 percent”.
Since rates rose, a number of mortgage applications have been declining. Purchase and refinance applications went down to 4.7% last week compared to the previous week according to MBA’s weekly survey.
The drop of mortgage approval seems likely to represent a “blip” as government programs are spurring home buying, Samuel Tombs an economist at Capital Economics says.
Economists had forecast an increase to 59,700 from an initially reported 58,242, according to the median of 21 estimates in a Bloomberg News survey. Business lending fell by 1.3 billion pounds ($2 billion).
Ray Boulger of John Charcol said: “I can see no point in borrowers waiting for rates to fall further. Swap rates are rising and Mark Carney’s attempt to engineer low rates over the medium term has clearly failed. There is no indication mortgage rates are going to suddenly shoot up, but they certainly will rise.”
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*This post was contributed by Brent Dev, thoughts and opinions expressed here are those of the author alone and does not reflect the views of the website.