Purchase mortgages at highest level for many years

The latest mortgage index from Charcol.co.uk reveals that the proportion of mortgage purchases is at its highest level for many years.

Related topics:  Mortgages
Millie Dyson
25th August 2010
Mortgages
Drew Wotherspoon, director of marketing at Charcol.co.uk, comments:

"For the first time in what we believe is decades, the proportion of mortgages for purchases broke the 60% barrier in July, revealing a certain confidence in the future of the market. There is much talk of a double dip and a large correction in the housing market still to come, but these figures would certainly go some way towards questioning this theory.

"The rule book may well have been ripped up when the crunch began, but the old adage of supply and demand still holds true. Whilst we have limited new stock demand will always outstrip supply in the UK. The last few years have taught us to expect anything, but a further large drop in prices looks very unlikely, unless the FSA'S proposed rules on affordability are implemented as currently drafted.

"At the same time we see remortgaging still remaining in the doldrums.  Just two years ago it accounted for 75% of the market, whereas it is now just 40%. With tightening of lender criteria and many people reverting to reasonably attractive rates there is little surprise in this, but borrowers should definitely keep their eyes on the ball.

"Logic dictates that a move in bank rate will spur some people into action, but many shouldn't wait for that.  Increasing numbers of borrowers would be better off if they moved. As ever, getting advice on your own situation from an independent broker is the best advice."

Variable rates still dominant

"Even with the improvement in pricing of fixed rates recently, borrowers are showing little signs that they believe it is time to take long term security. Despite the best attempts of some market commentators to scare the entirety of UK borrowers by suggesting we could have 8% interest rates soon, variable rates are still, in our opinion, the product of choice.

"For the record, we would be surprised if bank rate was anywhere near that level by the end of 2015.

Number of first time buyers increases by 80% in one month

"This is the highest level since February this year and perhaps suggests that first timers are willing to dip their toe into the market again after sensibly putting any plans on hold pending the outcome of the election and subsequent emergency budget.

"However, one month doth not make a trend, so John Charcol is wary in drawing too many conclusions from this figure. That said, it will be interesting to see over the coming months if the trend does continue."
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