Using data from more than 300 brokers and 700 estate agents, the Index reports the total number of mortgage applications in March was up 1.1% from February, which was itself up a significant 28.3% on January. Mortgage applications are now up 98.1% from December 2011.
The increase has occurred despite mortgage rate rises and the expected reintroduction of stamp duty for purchases between £125,000 and £250,000.
Boosted by the concerns over further increases to lenders’ SVRs, together with the withdrawal of upfront discounted deals, mortgage applications in March 2012 were 5% higher than the same time last year. The average loan-to-value on mortgage applications for home purchase fell very slightly to 70.5% from 71.8% in February, although it has remained relatively static over the last year, having stood at 69.9% in March 2011.
The average deposit on applications for purchase business increased to £58,048 in March from £57,092 in February. Over the last 12 months the average deposit has increased 12.7% from £51,506 in March 2011. This closely follows the 14.5% increase in the size of the average mortgage over the last year, from £126,647 in March 2011 to £145,005 in March 2012, and also the 14% increase in the average purchase price since last March from £178,153 to £203,054 in March 2012.
The average income of borrowers making applications for purchase stood at £35,288 in March, increasing 6.3% from the same time last year when it stood at £33,664. The percentage of applicants seeking fixed rate deals in March was 78.7%, up significantly from 73.3% in February. This is the highest fixed rate percentage since the previous peak of 79.5% in March last year and the second highest since the summer of 2009.
Bank base rate has been held at 0.5% for almost three years and there is a growing expectation that this rate will rise again soon. Together with lenders already starting to increase their SVRs from historic lows it is likely that this strong increase in preference for fixed rate deals that ‘lock in’ current competitive rates for some years will continue over the next few months.
Affordability data
Affordability has continued to improve in the last quarter with average annual income, as a percentage of purchase price, falling slightly again to 17.4% in March (down from 17.7% in February and 18.2% in January 2012). The average annual income as a percentage of loan value also fell, to 24.3% (compared to 24.9% in February and 25.5% in January 2012).
Average annual income as a percentage of deposit fell back to 60.8% in March, down from 61.6% in February 2012 and down from 62.9% in January 2012. This suggests that buyers are finding higher deposits from savings, or from relatives or inheritance. Year-on-year mortgage rates are still down on March 2011 and well below pre-crunch 2007 levels. However, average rates – particularly two and three year deals – have again increased in the last month.
The average rate on a two-year fixed rate deal in March was 4.54% compared to 4.36% in February, and the average three-year fixed rate increased similarly from 4.63% in February to 4.76% in March 2012. Both two and three year fixes have risen since the end of the year but remain lower than in March 2011 when they were respectively 4.58% and 5.18%.
The average five-year fixed rate increased very slightly from 4.64% in February to 4.67%, much lower than in March 2011 when the average rate for a five-year fix was 5.66%. The average rate on a two-year tracker has also been rising this year: 3.67% for March 2012 up from 3.54% in February and up from 3.39% at the end of 2011.
While rates are all increasing they are still well below the past peaks at the end of 2007 when the average two-year fixed rate was 6.6% and the average twoyear tracker was 6.43%. The number of mortgage products available through intermediaries fell slightly in March dropping to 5,487, down from 5,855 in February and down 16.6% from 6,577 in January.
March numbers are also down 9.6% from the same time last year, but are still up from the low point of February 2009 when there were just 2,559 products available.
Regional data
Greater levels of activity at the higher end of the market have caused the average loan size on applications in Greater London to rise to £321,643. This is an 8.1% increase on February 2012 (average price £297,606), which itself was up 7.9% on the average price in January 2011 (average price £275,915).
However, it was a more mixed story across the other regions, with the average loan size in the North and North West regions falling slightly for a second month in a row, respectively by 3.4% and 0.9% from February. Only three regions now have an average loan size below £100,000: North (£93,112), Yorkshire & Humberside (£97,701) and North West (£87,195).
Elsewhere modest rises were recorded for Yorkshire and Humberside, Midlands, South East, South West and Wales and quite significant rises were recorded in East Anglia and Greater London.
Deposits paid have increased in all regions in March compared to February, with the largest rises recorded in the North (up 22% to £37,037) and East Anglia (up 20% to £48,050). The change in the sizes of deposit have been quite erratic over the past year, but mainly keeping between 25% and 35% of purchase price in all regions.
Remortgage data:
The average loan to value on remortgage applications increased to 58.5% from 58.1% in February 2012, and is notably higher than the 56.0% in March 2011. The average remortgage loan application was for £149,162, which was up very slightly from £148,303 in February 2012. Year-on-year data shows this has increased by just over £7,300 from £141,833 in March 2011.
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