CML media note in advance of tomorrow’s MPC decision on interest rates

CML logo for press releases

Wednesday, 06, Aug 2008 12:00

While we do not expect a rate change tomorrow, a notional quarter or half point decrease or increase, if implemented on mortgage rates, would affect various size mortgages based on a typical average variable rate in May 2008.

As a result of Bank rate reductions, mortgage rates have moved down from their peak at the end of 2007. In the fourth quarter of 2007 the average mortgage rate was 5.97% and for the average outstanding mortgage of £100,000 the average monthly repayment would have been £642 per month (assuming capital plus interest), compared with the second quarter of 2008 when the average mortgage rate was 5.76% and the average monthly repayment for the same value mortgage would be £630.

Key statistics for new UK mortgage lending:

· Average first-time buyer mortgage (May 2008): £113,500

· Average home-mover mortgage (May 2008): £134,234

· Average new mortgage for house purchase (May 2008): £125,000

· Average gross income for first-time buyer (May 2008): £35,000

· Average gross income for home mover (May 2008): £46,500

· Average proportion of income first-time buyers spend on mortgage interest payments (May 2008): 19.6%

· Average proportion of income home movers spend on mortgage interest payments (May 2008): 17%

· Proportion of all borrowers taking out a fixed-rate mortgage (May 2008): 66%

· Proportion of borrowers taking out a tracker mortgage (May 2008): 24%

Key statistics for outstanding UK mortgages:

· Number of UK households with a mortgage: 11.8 million

· Estimated proportion of borrowers on fixed rates: 48%

· Estimated proportion of borrowers on tracker rates (tracking either Bank base rate or libor): 27%

· Estimated proportion of borrowers on standard variable rate: 17%

CONTACT

Sue Anderson – 020 7438 8924

Sarah Robson – 020 7438 8922

NIGHT/WEEKEND CALLS ONLY

Sue Anderson – 07983 388755

Sarah Robson - 07983 388764

CML PRESS OFFICE