Mortgages London | Mortgages in London

Mortgage rates in London have fallen to the lowest levels since December 2009 according to a survey, but applications have fallen too. Average rates as declared by Countrywide fell to 4.73% from 5.33% for the same time last year. Whilst the number of applications has increased compared to May 2009, they have dropped by 8% over the last month, raising concerns over the recovery of the housing market.

Countrywide have based these figures on the activities of hundreds of consultants, and have also identified a shift between tracker and fixed rate mortgages over the last 12 months. This time last year only 3% of applications through Countrywide were for tracker mortgages. This number rose dramatically to 47% by the close of 2009, and has since fallen to 35%. It is thought that the recent change in trends is due to consumer uncertainty over political and economic change in the UK, with borrowers regarding fixed rate deals as a safer option.

Although mortgage rates in London may be at an all time low, there will be an inevitable rise over the coming year, with predictions that mortgage rates will rise by 3.5% by the end of 2011. This has the potential to cause repayment problems for Londoners that have been reaping the benefits of low interest rates over the last 15 months. According to a recent report, some homeowners have not been paying off any of the interest on their London mortgage.

This is only applicable to borrowers who initially took out a tracker mortgage when interest rates were high, and then felt the benefits of consistently lower interest rates. Some Cheltenham and Gloucester customers have in fact found themselves in a position where their tracker mortgage was actually pegged at over 1% lower than the Bank of England’s base rate of 0.5%, resulting in no interest being paid at all since March last year.

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