Data released earlier this week shows that the level of mortgage borrowing was broadly unchanged last month; however, it was considerably lower than the same month last year. As predicted mortgage borrowing has continued at a steady pace. Although the figures are down from the highs of last year, the market looks like it has adjusted to a more reasonable level. These figures indicate that the housing market has started to stabilize at a new lower levels last seen around 2003. The recent changes in interest rates should help ensure that this stability continues over the coming months by giving a much needed boost to consumer confidence about future interest rates.
As mortgages go, fixed rate mortgages are the most popular product sold. Fifty percent of all mortgages sold last month were on fixed rate financing, the highest proportion since January of 1999. This is probably because in the run-up to the change in interest rates, something of a fixed rate mortgage price war broke out seeing some mortgage lenders cut their rates to less than 4.25 percent. These deals are now looking more attractive than ever, after economic data released since the cut rates makes it less likely that rates will drop below their current levels. The drop in interest rates will also reduce the cost of variable rate mortgages, as well as boosting consumer confidence after rising interest rates.