New mortgage applications for house purchase are at their highest level since February 2008, according to the latest figures from the Mortgage Advice Bureau/Coreco National Mortgage Index.
Following the expected summer lull in mortgage activity in August, purchase mortgage applications jumped 14% in September, with remortgage applications jumping by 14.3% in September compared to the previous month.
Although housing market activity traditionally picks up in September, purchase mortgage applications are still up almost a third, 31.2%, on September 2009.
The average LTV on purchase mortgage applications rose slightly from 70.2% in August to 70.4% in September, while the average loan size for purchase mortgage applications dropped 1.3% from £129,270 in August to £127,591 in September.
Regionally, the South West and East Anglia saw a 56.3% and 50% rise in purchase mortgage applications respectively in September compared to August. Meanwhile, Yorkshire & Humber witnessed an 18.9% drop-off in purchase mortgage applications in September compared to the previous month.
Looking at the types of mortgage products arranged in September, the majority of purchase and remortgage applicants, 62%, chose fixed rates over variable, compared to 58.5% of applicants choosing fixed rates in August.
The average age of a UK mortgage applicant in August was 37 years 2 months, while the oldest applicants were in the South West, 39 years seven months and the youngest in East Anglia a 33 years and two months.
Brian Murphy, head of lending, independent mortgage broker Mortgage Advice Bureau, says: “The uplift witnessed in September following the drop-off in August reflects a more normal level of seasonal activity. We have seen an increase in mortgage activity in seven of the ten regions in the house purchase arena and in eight out of the ten regions in the re-mortgage sector in September versus August.
“However, with the new coalition government announcing specific plans to make changes to the provision of child benefit ahead of the widely anticipated Spending Review, albeit for higher rate taxpayers, we are seeing real evidence that disposable incomes are going to come under considerable pressure and this is likely to put a further brake on borrowers’ ability and appetite to move home.
“Although interest rate rises look unlikely in the short term, we have seen borrowers seeking the sanctuary that fixed rates afford them in increasing numbers. The number of house purchase borrowers who opted for fixed rates rose in all ten regions during September and reached its highest proportion so far this year, at 65.1%.”
He says overall, the proportion of remortgage borrowers opting for fixed rates also increased from 53.6% during August to 55.8% in September, although variable rates remained in the ascendency in three of the ten regions.
He says: “These increases perhaps indicate that people are now starting to become more concerned about the impact that the spending and tax changes are likely to have on them and, as a consequence, are looking for the safer haven that a fixed rate provides to help manage household budgets in the turbulent times that undoubtedly lie ahead.
“Mortgage product availability continues to improve with product numbers available to intermediaries reaching post-Credit Crunch highs of almost 5,000.”
Source: Mortgage Strategy & MAB 15.10.10
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