Good news for borrowers with smaller deposits as 95% mortgages re-enter the market.

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Jill Smith from Heywoods comments on the latest Bank of England base rate decision.

Not for the first time in recent months the policy setters have chosen the “wait and see” approach presumably while they await fourth quarter 2011 economic growth data and the next set of inflation figures.

For January the Monetary Policy Committee therefore voted for no change in the Bank of England base rate.

The Eurozone crisis remains unresolved and we can only hope that the politicians are able to reach agreement to resolve the situation for the longer term rather than the series of sticking plasters that have left the markets unimpressed.

December saw the anticipated seasonal slowdown in the housing and mortgage market, although activity amongst purchasers and remortgage borrowers was ahead of the same period in 2010.

As you would expect in the current economic climate many purchasers continue to opt for the certainty that fixed rate mortgages offer, with 3 out of 4 buyers electing to fix. Those homeowners remortgaging are also still firmly in favour of fixed rates but the proportion is slightly less, with just under two thirds choosing fixed rate deals.

Moneyfacts report that January saw changes in the average rates available, with the average 2, 3 and 5 year fixed rates and 2 year tracker rate all rising very slightly. The average fixed mortgage rates for January are 4.27% (2 year), 4.53% (3 year) and 4.61% (5 year) all of which are below the same period twelve months ago, although average 2 year trackers at 3.50% are marginally above this time last year.

In line with the seasonal slowdown in mortgage activity, lenders reduced the number of products available during December with the number of available deals dropping to a little over 7,000, down by around 5% on the previous month. Already this year we have witnessed several lenders refresh and re-price their mortgage products for the new year, a new lender in the shape of Accord Mortgages start to offer mortgages at 90% loan to value and Newcastle Building Society re-enter the 95% loan to value market. This is good news for borrowers with smaller deposits or lower levels of equity allowing more potential buyers to access the market.

Jill Smith is from Heywoods. For further information, please call 01782 664995 or email jillsmi@mab.org.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.

A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £95. (or insert fee statement)