Saturday 10 July 2010

UK Mortgage Rates and Mortgage Approvals – July 2010 Update

Today I present two regular charts that could provide an indication of what is happening in the housing market. The first shows the monthly interest rate of UK resident banks and building societies sterling standard variable rate mortgage to households (not seasonally adjusted) and highlights that for this data set rates remain at near record lows at 3.92% for May 2010 (actual low was 3.82% in April 2009). Compare this with the retail price index (RPI) of 5.1% and the average mortgage is better than free money with a negative real interest rate. Month on month the rate has fallen by 1.8% and year on year the rate has risen by only 2.4%. I’d call both of these changes flat which is obvious by looking at the chart.

The second chart shows mortgage approvals. Non-seasonally adjusted rates rise month on month by 0.6% to 53,960 for May 2010 however as the chart shows this is a very noisy and erratic data set. Year on year figure also shows a rise of 3.0%. Seasonally adjusted figures show mortgage approvals flat month on month at 49,815 (fell by a tiny 13 approvals) for May 2010. Year on year figures show a rise from 46,571 or 7%. This is still well below the long term average of 91,084.

As always do your own research.

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