Rate falls point to a more positive 2010 for mortgages

Since reaching a low in April, property values in the UK have risen by over £13,000 to £167,664 – an 8.5 per cent climb. In the year as a whole, the average price of a home has increased by almost £7,000. However, these results must be tempered by warnings from various bodies, analysts and experts that have predicted a relatively flat market in 2010, in which house prices are predicted to reach a plateau of sorts.This might not be the sort of thing that homeowners looking to trade up want to hear, but it should be remembered that soaring house prices, which, ridiculously, some people thought would never end, played more than its part in the financial crisis, as buyers borrowed hugely over the odds from lenders that should have known better.Having had their fingers burned, providers have been reluctant to sign off all but the safest home loans. This trend appears to be softening, however, as figures show that the number of home loans reached 55,000 in October, the highest number in a single month since December 2007. As with the value of property, comparisons with the beginning of 2009 show progress, with just 23,000 loans for home purchases signed off in January.So, house prices are moving upwards and the number of home loans is going in the same direction. What will also help stimulate the sector is the welcome downward movement in fixed rates. At the end of November, the average rate on a two year fixed rate mortgage product fell below 5.00 per cent for the first time since June. Since then, it has fallen to 4.86 per cent, with Abbey, Accord Mortgages, A&L, C&G, first direct, Leeds BS, Post Office, Scottish Widows Bank and Yorkshire BS all cutting their rates.It may seem a risk to tie into a fixed rate, especially given recent predictions that the record low base rate may not move until 2011 – although perceived wisdom sees movement in 2010 – but even more attractive rates can be gained if borrowers are prepared to commit for a longer period of time. Rates of 4.39 per cent and 4.75 per cent are available in the three and five year fixed markets respectively.