December 16, 2009
Mortgages - Highest Number In Last 2 Years
The number of mortgages advanced to buy property hit 55,000 in October, the highest level since December 2007.
Figures from the Council of Mortgage Lenders (CML) show that the number of buyers has ramped up this year from just 23,000 in January.
Remortgaging activity – where borrowers move their mortgage and/or their lender without moving home, remains subdued, with the figure for October remaining static at 33,000. That is a very slight improvement on the 30,000 remortgages carried out in August, which represented a record low since the CML began collating data on remortgaging in 2002.
Remortgaging levels are down because many people coming to the end of a special fixed rate, discount or tracker deal find that either they do not qualify for a new deal because they do not have sufficient equity in their property, in which case they are forced to stay on their existing lender’s standard variable rate (SVR), or they find that their lender’s SVR is simply lower than anything else available in any case.
Fixed mortgages continue to lose popularity, with the proportion of borrowers opting for a fix declining from 80% in July to 66% in October.
Tracker mortgages, which track the Bank Base Rate, are attracting more borrowers, rising from 12% in July to 21% in October. This suggests that more people now believe that the Bank Base Rate will remain at or near its historic low of 0.5% for some time. Lenders have also been pricing their trackers more attractively than their fixed rates in recent months.
CML director general Michael Coogan said:
“We are still in a two-speed mortgage market. It appears that low interest rates for those with substantial deposits, coupled with this year’s sustained increases in house prices, are encouraging more people to buy or move home.
“But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans. This, coupled with ongoing tightness in lending criteria, continues to hold back the remortgage market."
