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Brian Murphy is head of lending at Mortgage Advice Bureau


Post stamp duty holiday


blues fail to materialise Brian Murphy has the latest on mortgage lending.


T


he recent Budget’s reinstatement of stamp duty on properties costing less than


£150,000 and the creation of the seven per cent ‘mansion tax’, for houses costing more than £2m, has done little to dampen purchaser’s demand. Mortgage activity levels continued to increase in March, rounding out a strong fi rst quarter and defying many of the more negative predications which prevailed at the beginning of the year. There was little else announced in the Budget that should slow down this activity. In Greater London for example, activity at the top end was instrumental in dragging the average loan size on applications to £321,643 – up 8.1 per cent from £297,606 in February. Our March data shows mortgage applications – both purchase and re-mortgage – are up 98.1 per cent on December 2011 and are running fi ve per cent higher than this time last year. Tellingly, the number of borrowers choosing to lock in rates with a fi xed rate deal increased to the second highest level since the summer of 2009 and they now account for more than three out of every four transactions (78.7 per cent in March from 73.3 per cent in February). In the wider market the


average two and three-year fi xed rate deals have increased again in the last month. The average


“The recent budget did little to dampen


mortgage demand.”


two-year fi xed rate deal was 4.54 per cent in March compared to 4.36 per cent in February and the average three-year fi xed-rate deal increased from 4.63 per cent in February to 4.76 per cent in March. However, mortgage rates are well below pre-crunch 2007 levels, when the average two-year fi xed rate stood at 6.6 per cent. One reason as to why the


market is proving so resilient is that a number of lenders, having moved criteria around regarding the availability and eligibility of borrowers seeking interest only


Scally rally challengers


Staff from Nottingham’s Fraser Brown Solicitors and Salloway Property Consultants will team up for the ‘Scally Rally’, to raise money for Rutland House School, which provides support for children with motor development disorders The rally covers the three peaks route, using only minor roads to get as close to Ben Nevis,


www.the-negotiator.co.uk


Scafell Pike and Snowdon, in a car that must cost less than £500, between 29 June and 2 July. The team has bought a 1996 Fiat Coupe. To fi nd out more about the challenge or


charity, please contact Jenny Bexon at Fraser Brown on 0115 947 1546, email: jbexon@ fraserbrown.com or visit: www.justgiving. com/scallyrally2012


TheNegotiator ● June 2012 ● 13


mortgages, have continued to raise rates and increase margins as a result of strong demand. These recent increases to lenders’ Standard Variable Rates (SVRs) and the withdrawal of products with upfront discounted fees have caused more people to engage with the housing market in case costs rise even further. Returning to activity at the


lower end of the market, the NewBuy scheme has generated a signifi cant amount of interest since it was launched on 12 March to help borrowers with small deposits. Our recently


acquired business and specialist broker within the new build arena Mortgage Talk was the fi rst broker to complete a NewBuy case. Feedback here shows that enquiries about NewBuy have been very encouraging and now accounts for 18 per cent of new enquiries. However, there is a big educational process to undertake. A lot of borrowers are being put off from buying a home as they still think they need at least a 20 per cent deposit before a lender will look at them. The reality is there are now a number of 95 per cent LTV deals available, and the NewBuy scheme has added too. If there is a concern about


NewBuy it is that we need more lenders to engage with the scheme. At the moment there are just four lenders off ering NewBuy products; NatWest; Woolwich; Nationwide and Halifax and several of these have restrictions as to how consumers can access the products. The more competition for business we see among lenders the greater chance we have of seeing prices come down. Mortgage rates remain low,


and aff ordability improves. The average income as a percentage of purchase prices has fallen from to 17.4 per cent in March from 18.2 per cent in January 2012 – so looking further into Q2, there is little to suggest activity levels won’t remain high.


TheComment


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