"Although there is little sign of an interest rate rise on the horizon, fixed rates in particular are just too good to miss out on."
The average interest rate decreased by a further 8 bps in Q2 2016 to 2.56%, the lowest rate since the MLAR series began in 2007.
This was driven by a decrease in the fixed rate of 6 bps to 2.60%, and a decrease in the variable rate of 17 bps to 2.35%.
The average interest rate on total amounts outstanding decreased by 5 bps to 2.99% in Q2 2016, another record low. This was due to a decrease in the fixed rate of 6 bps to 3.00% and a decrease in the variable rate of 3 bps to 2.98%.
The proportion of lending to first time buyers increased in by 5.1 percentage points to 22.0% in Q2.
FTBs were aided by an increase in lending above 90% LTV, which rose by 1.4% to 4.1% in Q2 2016. The proportion of gross advances to borrowers with a single income multiple of more than 4.00x also increased by 0.6 percentage points to 10.1% in Q2 2016.
Conversely, the buy-to-let proportion of lending decreased from 21.1% in Q1 2016 to 13.1% in Q2 2016, largely due to effects surrounding the stamp duty rise..
BTL advances (which include BTL remortgages) decreased from £8.3 billion in Q2 2015 to £7.6 billion in Q2 2016.
However BTL balances outstanding were £188.4 billion in Q2 2016, which, at 15.2% of total residential balances is the highest proportion since the series began.
The proportion of remortgages increased from 25.3% in Q1 2016 to 30.0% in Q2 2016.
Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: "The number of first-time buyers continues to rise as they take advantage of high loan-to-value deals at exceptionally cheap rates. There was a slight uplift in the volume of borrowing above 90 per cent loan-to-value, emphasising the difficulty in saving for a deposit in a market where wage increases are not keeping pace with house-price inflation.
"Unsurprisingly, there was as drop off in buy-to-let lending compared with Q1 as investors brought forward buying decisions to the first quarter of the year in order to beat the hike in stamp duty at the start of April. While buy-to-let has come under attack in recent times, with a number of tax changes as well as the increase in stamp duty for landlords, demand is likely to recover over the rest of the year as there remain precious few other options for people to invest their money.
"There was a significant uplift in remortgaging compared with the first quarter as homeowners took advantage of cheap mortgage rates. Although there is little sign of an interest rate rise on the horizon, fixed rates in particular are just too good to miss out on."
