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Written by rosalind renshaw

Mortgage applications for house purchase fell by 11.4% in October, whilst remortgage applications were up 19.7% on September.

According to the latest Mortgage Advice Bureau / Coreco National Mortgage Index, remortgage applications reached their highest level since November 2008.
 
With lenders currently offering five-year fixed deals at under 4%, and continuing concerns over economic stability and future interest rate and house price movements, the figures suggest borrowers are keen to seek the sanctuary of fixed deals before the New Year.
 
The picture was an entirely different one for purchase mortgage applications which, after rising 14% in September compared to the previous month, dropped off dramatically in October.
 
Despite this drop, total mortgage applications (purchase and remortgage) are actually up by a quarter (24.5%) for the year to date compared to the same period in 2009.
 
The average LTV on purchase mortgage applications remained at 70.4%, the same level as in September, while the average loan size for purchase mortgage applications fell again, from £127,591 in September to £123,982 in October, a drop of 2.8%.
 
The average deposit put down by a purchase mortgage applicant in October was £36,699 compared to £37,767 in September.
 
The average LTV on remortgage applications rose from 53.1% in September to 55.0% in October, while the average remortgage application loan size dropped by a substantial 12.1% in October to £130,913 compared to £148,934 the previous month.
 
Looking at the types of mortgage products (fixed or variable) arranged in October, the majority of purchase and remortgage applicants continued to choose fixed over variable rates, with 63.6% choosing fixed products compared to 62.8% in September.

Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said: “On the purchase mortgage side, in a normally functioning market we would expect to see a further increase in purchase mortgage activity in October following the post-summer uplift witnessed in September.

“However, we are still far from a normally functioning market, and following the Government’s Spending Review we are not surprised to see activity fall back as some nervous buyers step back from the mark.”

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