The proportion of mortgages being taken out for purchases, as opposed to remortgages, is at its highest level for years.
The latest mortgage index from John Charcol reveals that six out of ten mortgages are for purchases.
Drew Wotherspoon, director of marketing at Charcol.co.uk, said: “For the first time in what we believe is decades, the proportion of mortgages for purchases broke the 60% barrier in July, revealing a certain confidence in the future of the market."
He went on to claim: “There is much talk of a double dip and a large correction in the housing market still to come, but these figures would certainly go some way towards questioning this theory.
“The rule book may well have been ripped up when the crunch began, but the old adage of supply and demand still holds true. While we have limited new stock, demand will always outstrip supply in the UK.
“The last few years have taught us to expect anything, but a further large drop in prices looks very unlikely.”
The independent mortgage advisers expect remortgaging to remain in the doldrums. Just two years ago it accounted for 75% of the market, but it is now just 40%.
“Despite the best attempts of some market commentators to scare borrowers by suggesting we could have 8% interest rates soon, variable rates are still, in our opinion, the product of choice.”
He added: “For the record, we would be surprised if bank rate was anywhere near that level by the end of 2015.”
The index also showed that the number of first-time buyers increased by 80% in one month.
“This is the highest level since February and perhaps suggests that first-timers are willing to dip their toe into the market again after sensibly putting any plans on hold pending the outcome of the election and subsequent emergency budget,” said Wotherspoon.
Source EAT 27.08.10
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