Mortgage rates to 'remain affordable', according to CML

Mortgage rates will remain at an "affordable standard" in the coming months, according to an industry body.

The Council of Mortgage Lenders (CML) said that there are clearly "upward pressures" at the moment, although unless there is a very large degree of disruption then rates for UK property will remain steady by historical standards.

However, that disturbance might be around the corner, with Bernard Clarke, communications manager at the CML stating that developments in Europe could play a major role.

He was commenting after figures from the Bank of England revealed that the number of loan approvals for house purchase fell slightly in May and this was also lower than the previous six-month average.
"People need to anticipate what may be happening in the future. [Mortgage] rates have risen in response to the higher funding costs faced by lenders.

"The outlook for the moment is that the base rate will remain at the current low levels, but this does not necessarily determine the rates that lenders charge to borrowers - that is a function of how easy, difficult or expensive it is to raise funding," Mr Clarke said.

The Building Societies Association has also released mortgage lending figures, finding that borrowing from building societies and other mutual lenders rose 54 per cent to £2.8 billion in May 2012.

This was compared to £1.8 billion in May last year. Furthermore, in the first five months of this year, lending rose by 40 per cent compared to the same period in last year.

Adrian Coles, director-general of the Building Societies Association, said: "Lending activity by mutuals in May was once again strong. Other data collected shows that nearly a quarter (24 per cent) of new lending this year by mutuals was to first-time buyers. The mutual sector is giving a strong signal that it is open for business to all types of borrower whether buying a property for the first time or remortgaging."

He added that the figures demonstrated the mutual sector's commitment to lend over the coming months.