Cheap mortgage deals for the lucky few

744-moving-634 — The cost of moving has seen more of us stay put

How often do you move house? Not as often as you used to. Numbers out this week suggested that the turnover of housing stock has slowed considerably since the UK's housing bubble burst: from 2003 to 2007, the turnover of houses in our big cities rose to 7.1%. Now it is more like 3.6%.

Homes aren't changing hands as often as they were. Is that a problem? Not on the face of it, says James Ferguson of MacroStrategy Partnership. Most people only move five or six times in a lifetime and the first two houses won't be their own (they'll live with their parents and then rent their first home). After that they'll be first-time buyers, then family home buyers, and finally downsizers. Three purchases in, say 80 years, suggests a national natural transaction rate of 3.7%. Look at it like that and today's rate is normal it was the 2003-2007 rate that was out of whack.

The surprise, then, is not that turnover is so low (ie, normal), but that it is so low when mortgage rates are still at record lows something that should be driving a huge rise in transactions. Hometrack puts this down to a variety of factors.

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Moving costs have risen shockingly sharply (in 1997 the top rate of stamp duty was 1%, now it is 12%) higher transaction costs always make for stickier markets. Inflation no longer erodes mortgage debt as it did. And high house prices make it hard for new buyers to build the deposits needed to enter the market.

However, it might be more about the difficulty of getting a mortgage than any of these things. Total mortgage lending has grown by just 2% in nominal terms since 2008, says Ferguson (so not at all in real, after-inflation, terms). That suggests banks are still repairing their balance sheets (and so are not yet willing to lend freely). It also suggests that the new, stricter mortgage lending rules are having an effect: super-low mortgage rates aren't much good to you if you don't meet the criteria to have one.

That's a view backed up by research just out from Experian, which shows that "almost half of those who planned to buy a property since the introduction of the government's new affordability rules in April 2014 have failed to do so".

On the plus side, if you do meet the criteria, serious deals are to be had: if you can get your hands on a 25% deposit, says the Mail on Sunday, the average two-year fix is 1.99% and the average five-year is 2.98%. The best rates are even better.

There's a two-year fix on the market at 1.07%, a five year at 1.99% and even a ten year at just less than 3%. There are big upfront charges on the best of deals, but even once you have factored those in, this is as cheap as money has ever been.