Cheaper loans attract homebuyers

Homebuyers are getting a better deal on mortgages

The UK mortgage market is gaining strength, with 17% more homebuyers winning approval for new mortgages in February compared to January.

New borrowers are being presented with ever-more attractive products

Tim Sweeney
British Bankers Association

And the British Bankers Association expects demand for mortgages to grow further in the next few months, despite fears over a global economic slowdown and falling stock markets.

"There is every likelihood of the mortgage market strengthening in the coming months," said Tim Sweeney, director general of the British Bankers Association.

UK home buyers are rushing to take advantage of lower mortgage rates after the cut in interest rates from the Bank of England last month.

Borrowers have also gained from an intensifying price war between UK lenders.

Enticing products

New mortgage lending in February amounted to just less than £6bn, 2% lower than an unexpectedly strong January figure, but 20% higher than the previous February.

There is every likelihood of the mortgage market strengthening in the coming months

Tim Sweeney

And the figure is poised to rise further, given that the Bank of England is expected to cut rates further in line with this month's decision by the US central bank, the Federal Reserve.

"With expectations of constant or even falling interest rates, new borrowers are being presented with ever-more attractive products," said Mr Sweeney.

And variable rate mortgages - which already account for the bulk of mortgage loans - could display especially strong growth.

All the major high street banks including HSBC, Lloyds TSB, Barclays and the Royal Bank of Scotland are members of the British Bankers Association which collate the figures.