By Daniel Hunter
Mortgage activity bounced back in September as average rates continued to slide, according to the latest National Mortgage Index from the UK’s leading independent mortgage broker, Mortgage Advice Bureau (MAB).
Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index found the total number of applications increased by 1.9% in September. This increase was largely due to rise in remortgage activity of almost 12% against each of the previous two months, and means activity is currently 1.1% higher than at the same time last year.
The percentage of borrowers choosing fixed rates on purchase applications climbed 2.7% to 85.8% — a three-year high for the popularity of fixed-rates. And the percentage of remortgage borrowers choosing fixed rates also remained well above 80% at 82.9%.
In addition, the average LTV on purchase applications reached 70.2% in September —up 1.5% from August — as the size of the average deposit fell to £62,554. Despite this average deposits are still 10.4% higher than they were this time last year when the figure was £56,675.
“Deposits are still higher than they were this time last year and so are the rates on short term fixed rates, but applications numbers are also greater than they were 12 months ago which suggests that demand is strengthening," Brian Murphy, head of lending at Mortgage Advice Bureau, commented.
“The increase has been led the rise in competitive products recently, but the hike in remortgage borrowing in particular has been prompted by the coverage of the forthcoming increase in SVR announced by Santander. Borrowers have seen what happened earlier this year, as once the first lender announced it was hiking its SVR a number of lenders followed suit and there are worries that lenders will do the same this time.
“Despite some criticism the Funding for Lending schemes is starting to make an impact, and lenders have been cutting rates and increasing the number of products being offered. A number of lenders have now begun to engage with the higher loan-to-value sector again but we need to see more lenders moving up the LTV curve before we can claim to see any material increase in housing transactions.”
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