Easier bank funding conditions, partly due to the funding for lending scheme, resulted in a further fall in mortgage interest rates in December, particularly for higher loan-to-value (LTV) borrowers. Bank of England statistics show that the average rate on a two-year 90% LTV fixed mortgage fell from 5.63% in November to 5.31% in December – the lowest since October 2011. High LTV loans should soon be the cheapest since 2006 – see first chart.
In other UK news today, industrial production rose by 0.3% in November following a 0.9% fall in October, while construction output dropped by 3.4%, partially retracing a 8.3% October gain. November services output is released on 25 January. Assuming that output in the three sectors is stable at the latest-published level, GDP is on course to rise by 0.1% in the fourth quarter following a strong 0.9% third-quarter gain – second chart.
