NATIONAL MORTGAGE REVIEW:
Mortgages (excluding remortgages)
The popularity of fixed rate mortgages has steadily dropped month on month this year from its peak in March, when 80% of all mortgage applications were fixed rate deals. However, fixed rate deals still made up 74% of all applications in July.
The number of mortgage applications also fell in July, down 8% on June numbers. However, applications in July were still 23% higher than the corresponding month in 2010. Also, mortgage applications for the year to date are 17% higher than for the corresponding period in 2010.
The average loan size on mortgage applications in July was £135,873 compared to £138,965 in June, a drop of 2.2%.
The average LTV on mortgage applications in July was 69.1% compared to 71.3% in June. This was only the second month in 2011 that has seen the average LTV drop below 70%.
The average deposit put down by a mortgage applicant in July broke through the £60,000 barrier. Mortgage applicants had an average of £60,759 to put towards their mortgage, a significant increase on the average deposit in June of £55,937.
The average age of a mortgage applicant in the UK in July was 37 years 4 months and the average salary of a mortgage applicant was £34,675.
Remortgages
Although remortgage applications fell by 18% in July, the total number of applications in the year to date are still 34% higher than the corresponding period in 2010.
The percentage of homeowners remortgaging onto fixed rates dropped slightly in July to 60% down from 64% in June. The average loan size of remortgage applications in July was £142,005 compared to £150,740 in June, a fall of 5.8%.
The average LTV on remortgages rose slightly in July to 55.8% compared to 55.3% in June.
REGIONAL MORTGAGE REVIEW:
Mortgages (excluding remortgages)
Across the regions, mortgage application numbers fell in seven out of ten regions in July, the exceptions being the West Midlands, North West and South West.
The average loan size (excluding London) on mortgage applications in July was highest in the South East at £165,863 and lowest in the North West at £92,930. In four out of ten regions, average loan size was below £100,000.
In terms of product type, North West applicants continue to be the most cautious, with 91% of applicants choosing the safety of fixed rate mortgage deals in July.
This compares to 66% of applicants in the South West and 71% in Wales. Average LTVs were highest in North West (75.8%) and lowest in East Anglia (59.9%).
The oldest mortgage applicants in July were in the South West, averaging 39 years 7 months, while the youngest were in Yorkshire & Humber, averaging 35 years 3 months. In fact, for the year to date, the older applicants have been in the South West averaging 42 years, compared to the youngest in Yorkshire & Humber averaging 36 years 8 months.
The high average age of buyers in the South West is a reflection of the property prices being out of reach for many people.
Remortgages
For remortgages, 76% of applicants in the North West chose fixed rate deals during July, compared to half of applicants in Wales. The average LTV on remortgage applications in July was highest in the North (61%) and lowest in East Anglia (49.5%).
LONDON MORTGAGE REVIEW:
July saw a massive swing in the popularity of fixed rate mortgages. Whereas in June, the majority of applicants (59%) chose fixed rate deals, in July, the majority of applications (55%) were for variable rate products. This is further proof that fear over rate rises has abated.
However, mortgage applications (excluding remortgages) were down 13% in July compared to June, but applications were up 31% for the year to date, compared to the corresponding period in 2010.
The average LTV on mortgage applications (excluding remortgages) was 65.6% in July compared to 67.4% in June.
The average mortgage loan size was £289,223 in July compared to £312,158 in June. The average deposit put down by a London mortgage applicant in July was £151,666.
The average age of a purchase mortgage applicant in London in July was 38 years 2 months.
On the remortgage side, the average LTV on remortgage applications rose significant in July to 64.9% from 58.7% in May, while the average loan size in July was £323,176.
The number of remortgage applicants choosing fixed rate over variable rate deals stood at just 41%.
Brian Murphy, head of lending, independent mortgage broker Mortgage Advice Bureau:
“Surprisingly, fixed rate mortgage applications fell in July at the same time as average two and five year fixed rates dropped to all time low levels. This shift towards variable rate products is likely to be a response to expectation levels of an imminent interest rate rise easing.
“With a raft of economic indicators showing further slowing of the UK economy, and a recent poll of leading UK economists forecasting no bank base rate increase in 2011, and several predicting no change until 2012, variable rate mortgage take up has strengthened.
“Also, the view that low rates are here to stay for some time yet, will have been boosted by the US Federal Reserve announcing that, due to sluggish growth, it envisages holding its official federal funds interest rate for the next two years.
“However, even though the Bank of England could well keep the base rate at 0.5% until early 2012, what we’re unlikely to see is a seismic shift towards borrowers choosing variable rate products.
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