Chelsea Building Society has launched a five-year fixed-rate mortgage at 3.19 per cent.

The deal is available on a maximum loan-to-value (LTV) of 70% with a fee of £1,495.

The building society’s product manager Jemma Smith said the product “is the lowest five-year fixed-rate mortgage ever to come to the market which is great for customers wanting longer term security in fixing what is likely to be their biggest monthly outgoing”.

For house buyers seeking a lower fee, Chelsea offers a seven-year fixed-rate mortgage at 3.64% on a maximum 70% LTV, with a fee of £395.

The building society also offers a five-year fixed-rate offset mortgage at 3.39%, on a maximum 70% LTV, and with a £1,495 fee.

Chelsea, which is part of the Yorkshire Building Society, has also withdrawn its ten-year fixed-rate mortgage at 3.99 per cent.

Last week Leeds Building Society launched a new deal which may attract potential house buyers who can’t afford a large deposit.

The Leeds’ two-year discount home loan product is available at a loan-to-value (LTV) ratio of 95 per cent, at a rate of 5.25 per cent.

House buyers who are able to pay a ten per cent deposit will receive a rate of 4.35 per cent.

Leeds Building Society’s Sales and Marketing Director Kim Rebecchi said: “The society is also offering a free valuation up to £335 and free in-house legal services for standard remortgages, to those customers who require help with upfront costs.”

According to the latest research from Santander Mortgages, 53 per cent of potential house buyers are more optimistic about buying a new home in 2012 than they were a year ago, while just 15 per cent are less optimistic.

Eight per cent of Britons believe that they will successfully purchase a new home this year.

Norwich & Peterborough Building Society (N&P) has launched a low rate, low fee mortgage to attract buyers who plan to stay in their property for a longer period of time.

The ten-year fixed rate mortgage offers an interest rate of just 3.99 per cent APR, making it one of the cheapest deals on the market.

It is available to borrowers with 75 per cent loan-to-value ratio and the fee is just £295.

Borrowers will receive a free valuation and either free legal fees for remortgages or £200 cashback.

N&P product manager, Richard Barker, said: “We know that this competitive rate will be welcome news for those who wish to fix for a longer period of time giving them the certainty of what their monthly payments will be for the duration of their loan”.

Earlier this month, Nationwide Building Society launched a two-year fixed-rate mortgage with a loan-to-value ratio of 90 per cent for low-deposit buyers.

Borrowers willing to pay a £900 fee will receive a rate of 5.29 per cent or the mortgage is available with no fee at a rate of 5.69 per cent.

For those with a bigger deposit, a rate of 2.99 per cent is available at 60 per cent LTV with a fee of £900.

Despite the flurry of new offers in the market place providing welcome competition, the Council of Mortgage Lenders (CML) warned that the uncertainty created by the ongoing eurozone crisis makes it difficult to predict how the mortgage market will develop in 2012.

In December 2011 gross mortgage lending totalled £11.7bn, 12 per cent higher than December 2010, but a 12 per cent decline compared with the previous month.

Some analysts are predicting that house prices could fall by up to 10 per cent in 2012.

December marked the fifth consecutive month of year-on-year growth in mortgage lending, with a 12 per increase, according to the Council for Mortgage Lenders (CML).

Gross mortgage lending in December was an estimated £11.7 billion, while for the whole year it totalled £140 billion, £2 billion higher than the CML’s expectations.

December’s figures represent a 12% drop from November 2011, but this was partly due to the smaller number of working days in December.

November’s figures were also boosted by a substantial increase in the number of house-buyers taking up fixed-rate deals

In a strong end to the year, mortgage lending for the final quarter of 2011 totalled £37.3 billion, a year-on-year increase of 11 per cent.

However in the face of continuing economic uncertainty, a weak 2012 first half is expected for the housing market, with demand from buyers slowing as lenders increase mortgage rates.

Bob Pannell, the CML’s chief economist, said: “The closing months of 2011 saw stronger mortgage lending activity and housing transactions, despite the fact that short-term economic prospects are challenging.

“There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year.

“But, continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

The CML is also reminding property owners that they should take out rent protection insurance, as the ongoing economic uncertainty is expected to lead to an increase in repossessions.

Rising unemployment and other pressures on incomes are likely to see more people falling in arrears with their rent and mortgage payments in 2012, the CML warned.

Rent protection insurance protects a landlord for a specified length of time if a tenant is unable to pay the rent.

HSBC has announced plans to lend more than £15 billion in mortgages this year, with £3m of this ring-fenced for first-time buyers.

This should provide mortgages for up to 150,000 home buyers during 2012, including 27,000 people buying their first home.

The sum amounts to 11 per cent of all the mortgage borrowing predicted for 2012 and represents HSBC’s biggest ever share of the mortgage market.

Martijn van der Heijden, head of lending at HSBC, said that the promised investment “demonstrates HSBC’s commitment to continuing to help people move up or indeed take the first step on to the housing ladder.”

Although analysts have suggested that the economic downturn will cause lenders to tighten their mortgage criteria, HSBC said it had no plans to do so.

Its promised investment will come under its current lending strategy which is designed to ensure that new lending is in the best interests of customers and shareholders, the bank said.

The latest Bank of England Trends in Lending report suggests that there will be an increase in first-time buyer mortgage deals in the first quarter of 2012.

This will help borrowers with high loan-to-value ratios and could allow prospective buyers who are currently trapped in rental properties, to purchase their first property.

The first-time buyer share of the market has improved slightly since autumn 2011, when it hit its lowest level for nearly three years.

The latest data from the Council of Mortgage lenders reveals that first-time buyers took out 17,300 loans, worth £2.1bn, in November 2011, a 4 per cent increase by volume and 5 per cent by value compared with the previous month.

The withdrawal of the stamp duty concession in March is expected to help fuel an increase in first-time buyer activity in the first quarter, with prospective home owners hurrying to purchase their first property before the deadline.

The number of first time buyers increased significantly last year as more high loan to value (LTV) mortgages became available, according to the latest Mortgage Monitor from e.surv chartered surveyors.

The number of mortgages advanced at an LTV of 85% or more increased by 32 per cent to 57,301 in 2011 compared with 43,379 in 2010 and lenders also relaxed the qualifying criteria on this type of mortgage.

The average deposit fell to 38 per cent in December 2011, compared with 41 per cent in December 2010 and for the year as a whole, the average deposit fell to 39 per cent, compared with 43 per cent in 2010.

The number of mortgages approved on first time buyer property (worth £125,000 or less) in December 2011 soared by 25 per cent to 12,343, compared with 9,873 in December 2010.

According to the survey, lending conditions are at their most favourable for buyers since August 2007.

Richard Sexton, director of e.surv, said: ‘The improvement in 2011 is modest, but when taken against the backdrop of the eurozone crisis and turgid economic growth, it’s clear the market demonstrated real staying power last year,’

Barclays also revealed the results of its latest mortgage survey, claiming that mortgages in 2011 were the most affordable since records began 10 years ago.

The survey, based on data from more than one million customers’ accounts, found that homeowners spent an average of 15.4% of their take-home pay on their monthly mortgage payments last year compared with 20.5% in 2008.

In September 2011, the typical monthly mortgage payment fell to £488 a month, representing 15.2% of take-home pay.

Head of mortgages at Barclays, Andy Gray, said: “With the cheapest ever mortgage deals offered to homeowners last year and the fiercely competitive mortgage market, it stands to reason that the average monthly mortgage payment was at its most affordable level in a decade.”

In the last year around seven million UK house buyers have been forced to use payday loans or unauthorised overdrafts to meet their mortgage repayments, according to housing charity Shelter.

With both of these sources of finance potentially carrying extremely high interest rates, this represents one in seven Britons who could be at risk of falling into a “spiral of debt” and losing their homes, Shelter warned.

Payday lenders may charge interest as high as 4,000% APR on short-term loans.

Around 2% of people have turned to payday loans to fund their rent or mortgage in the last year, Shelter said.

Campbell Robb, chief executive of Shelter, said: “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.

“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.

“It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness.”

The situation is likely to worsen this month after Government caps on housing benefits took effect on 1 January.

The changes mean that people aged between 24 and 35 who live alone could lose up to £40 a week in housing benefit.

In related news, Finnish payday loans firm Ferratum said today that it expects rapid growth in Britain this year.

The company opened for business in the UK in July and gained several thousand new customers in December, as people took out short-term loans to fund their Christmas spending.

Across the industry, Ferratum expects the number of payday loan applications in Britain to increase to 3.5 million in 2012, compared with 2 million in 2011.

52,854 mortgage loans were agreed in principle in November according to the latest figures from the Bank of England, just 68 higher than the previous month.

Although mortgage lending in November 2011 was 12% higher than in November 2010, there has been no significant improvement for four months.

Mortgage approvals remain at half their 2007 level, before the onset of the banking crisis.

Since the recession many first time buyers have been unable to raise the deposits demanded by lenders, which can be as high as 25 per cent.

With household incomes under pressure from high levels of unemployment and inflation the outlook for the housing market remains weak with house prices expected to fall by up to 10 per cent.

The number of approvals for remortgaging also fell in November to 31,154, compared with an average of 32,448 for the previous six months.

In contrast, mortgage lending by building societies and mutuals increased to £2.5 billion in November 2011 compared with £2 billion in November 2010.

Gross mortgage lending in the first 11 months of 2011 grew by 16% to £21.5 billion compared with £18.6 billion in the first 11 months of 2010.

This represents the highest level of gross mortgage lending since Building Societies Association (BSA) started reporting on the current basis in January 2010.

Adrian Coles, director-general of the BSA, said: “Mutuals have shown their resilience in the face of tough market conditions over the past year and have continued to see their new mortgage lending increase.

“Mutuals lent 16% more from January to November 2011 compared to the same period in 2010, whilst lending across the mortgage market as a whole has remained broadly flat”.

“These are encouraging trends against rather discouraging developments in the wider economy”, he continued.

The FSA’s report into lending, due to be published next week, is expected to include proposals to help home owners in negative equity.

The Council of Mortgage Lenders estimates that one in 12 homeowners are in negative equity, with their home now worth less than the price they paid for it, making it impossible for them to move house.

This can be a serious problem for growing families or for people who need to move because they have secured a new job outside their area.

Under the FSA’s new guidelines, homeowners would be able to remortgage to buy another property without having to immediately pay off the balance they owe on their current home.

In effect, this would mean they could move their negative equity to their new mortgage.

However, it is believed that this option may only be open to homeowners who have kept up to date with their mortgage payments.

It is hoped that relaxing the rules would ease the current shortage of first-time buyer properties and help to get the housing market moving again.

The FSA’s report, which follows a two-year inquiry, is also expected to include some tougher regulations on lending, designed to stop a repeat of the lending practices that led to the credit crunch in 2007.

Before the financial crisis, it was easy for house purchasers to borrow up to 125 per cent of the price of the property; in contrast buyers now usually face a minimum mortgage deposit of 5 per cent, while deposits of up to 20 per cent are not unusual.

In related news, Datamonitor’s latest research suggests that gross annual mortgage lending will fall from an estimated £138.5 billion in 2011 to just £127 billion in 2012.

However, gross mortgage lending is expected to increase in 2015 to £182 billion.

The research also suggests that more people will consider building their own properties, with mortgage advances for self-build properties expected to increase by 141 per cent, from £790 million in 2011 to £1.9 billion by 2015.

The Council of Mortgage Lenders (CML) expects the number of house repossessions to increase by 21.6 per cent from 37,000 this year to 45,000 in 2012 due to an increase in unemployment and falling household incomes.

The CML also expects housing transactions to fall next year, with 825,000 homes expected to be sold compared with an estimated 852,000 this year.

This would represent the lowest level of property sales since records began in 1978.

The CML has reduced its forecasts for gross mortgage lending to £138 billion for 2011, from a previous forecast of £140 billion.

It has also cut its forecast for 2012, from £150 billion to £133 billion due to increasing economic weakness.

Mortgage lending, especially to first-time buyers has fallen substantially since 2008, and with banks finding it increasingly difficult to raise funds, the CML warns that it may become even more difficult to secure a mortgage.

The government is hoping its planned mortgage indemnity scheme will help first-time buyers secure mortgages, but reservations have been expressed about how effective it will be.

Bob Pannell, chief economist at the CML, said: “Despite the fact that activity levels have already been subdued for several years, we have pencilled in a broadly flat picture, for both mortgage lending and property transactions, at least until real incomes show signs of stabilising as inflationary pressures recede.”

The latest figures from the Financial Services Authority (FSA) show a 5.8 per cent increase in the number of homes repossessed by lenders, from 9,134 in the second quarter to 9,670 in the third quarter of this year.

However mortgage arrears cases fell by 2 per cent to 34,900 in the third quarter, representing a year-on-year decline of 9 per cent, according to the FSA.

October was a difficult month for first-time buyers according to the latest figures from the Council of Mortgage Lenders (CML).

Ten per cent fewer home loans were offered to first-time buyers compared with September and the average deposit they had to find was a hefty 20 per cent.

In the current economic climate and with many prospective house purchasers living in expensive rental properties, finding this level of deposit is out of reach.

Just 16,400 first-time buyer loans were approved in October.

The total number of home loans approved for all groups fell 8 per cent compared with September, to 44,500.

On a year-on-year basis, home loans were down 5 per cent overall in October, and down 1 per cent for first time buyers.

The CML expects the number of first-time buyers seeking mortgages to increase early next year, as they rush to avoid having to pay stamp duty.

Until 25 March 2012 first-time buyers of residential property can apply for exemption from stamp duty on properties valued at £250,000 or less.

Paul Smee, CML director general, said: “Despite the fall in lending in October, it is possible that we will see signs of increased activity by first-time buyers in the early months of next year, as we approach the end of the government’s stamp duty concession at the end of March.”

The CML also delivered some good news for house purchasers with its figures showing that mortgages are at their most affordable level since 2004.

Although mortgage deposits remain high, monthly interest payments have shown a downward trend.

Mortgage interest accounted for 12 per cent of income in October, its lowest level since January 2004.

The government is trying to help first-time buyers struggling to find high deposits, through a proposed mortgage indemnity scheme.

This aims to encourage lenders to offer mortgages of up to 95% of a property’s value by guaranteeing that they will not lose money if the house-buyer defaults on their mortgage payments.

The government and participating house builders will contribute a certain percentage of a new-build property’s value into a loan guarantee fund through which lenders will be able to recover losses if a property falls into negative equity and is repossessed.