News Review: Lending
Spring offers brokers tentative remortgage hope by
David Finlay, intermediary business director, Barclays
an unusual combination of factors is said to have led to a 26% fall in house purchase lending in January, according to data from the council of mortgage Lenders. With the effects of last year’s govern- ment spending cuts beginning to bite and rising inflation and tax measures putting pressure on household budgets, poten- tial house-buyers are likely to have been discouraged. Spring can be a strange
time of year when evaluat- ing the mortgage market as seasonally speaking, it is usu- ally a time when activity and business increases but also when we reflect on december and January - the time of year when activity is generally at its lowest.
Housing But let’s keep some perspec- tive. February witnessed a flurry of activity as connells Survey and Valuation said the number of residential mort- gage valuations conducted rose by nearly a quarter in February compared to a year ago. the latest LSL acadamet-
rics house price index for Feb- ruary saw house prices rise by 0.3% in england and Wales to an average £222,456, with prices bolstered by strong demand in London and the South-east. the index also states that the value of the typical home fell 0.5% year- on-year, as the strong gains
seen in the early part of 2010 dropped out of the figures. new research from the
Worldwide Property group suggested the general public are split on the direction of house prices over the com- ing 12 months. it said 37% of people believe house prices will rise over the course of the year whilst 35% are think pric- es will remain static. a further 28% expect prices to fall. it would be interesting to
see how these results stack up if split regionally. i’d suggest there is currently more con- fidence in the London and South east markets but then again in the uK there will al- ways be pockets that will con- tinue to buck the house price trend.
Remortgage Opportunity despite dramatic falls in house purchase lending the cmL says remortgage activity fared better. the number of loans advanced in January dropped 6% (7% by value) from december. there were 22,100 mortgages worth £2.7bn advanced in the month, a fall from the previous January of 5% by number and 10% by value. remortgaging increased its share of total lending from 27% in december to 28% in January. in addition the Bank of
england’s lending to indi- viduals data show the number of remortgages grew to 33,498 in January, 10% above the six month average of 30,407. remortgages were valued at £4.2bn, £0.3bn more than the six month average. mortgage approvals for pur- chase increased to 45,723 but
8 mortgage introducer APRIL 2011
were still below the six-month average of 46,686. Legal & general investment
management recently claimed 90% of uK mortgages are on a variable rate, a figure that far exceeds other estimates. tim drayson, economist at Lgim, said just 10% of mortgage bor- rowers are on fixed rate deals and the remainder are on a discounted, tracker, capped or SVr rate. these statistics, if true,
speak for themselves and with a projected interest rate rise in the offing it is clear that more homeowners than ever need holistic advice.
Products the number of mortgage products available to inter- mediaries remained stable during February, mortgage Brain’s monthly product analysis showed. mortgage products listed on its sourcing system increased by 1.5% dur- ing February - an additional 151 products. current figures now list a to-
tal of 9,895 available mortgage products. despite witnessing little movement during the past month the 12-month analysis is still showing an en- couraging increase in product availability compared to this time last year - up 103% from 4,876. Fixed rate products con-
tinue to dominate the product type, accounting for almost 6,000 of all available products. a 0.6% drop was seen during February - a withdrawal of 34 products - to bring the cur- rent total to 5,948. Variable rate products also witnessed a slight drop of 0.4% during February, with
current figures listing 1,106 products – down from 1,110 at the beginning of the month. trackers remain the sec-
ond most popular product type and fared better during February, climbing by 7% to represent 2,841 of all available products. there has also been more
evidence of some exclusive and semi-exclusive products returning to the intermedi- ary market especially from specialist lenders in the buy-to-let arena which is a positive sign. Boosting intermediaries’ propositions in this and any other area of the market should be ap- plauded. our own research showed mortgage affordability has reached its best level in 10 years. analysis of over one million customers’ accounts found on average, people paid out 15.4% of their take-home pay at the end of december 2010 to cover their monthly mortgage payment. this is the lowest level ever registered by the study, which is now in its tenth year. a recent centre for eco-
nomics and Business re- search statement also suggest- ed affordability for first-time buyers will reach an eight year high in 2011 thanks to low mortgage rates and weaken- ing house price growth. However, there remains
a gulf between the abil- ity to take further steps on the property ladder and af- fordability as it relates to current levels of mortgage payments. this will continue but let’s hope that this gap continues to move in the right direction.
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