The Mortgage Search Tracker is powered by data from Mortgage 27, encompassing over 175,000 unique mortgage searches carried out each month by individual consumers via over 150 different websites, including leading consumer comparison sites and Mortgage Advice Bureau.
The data provides the earliest indication of consumer trends in the mortgage market ahead of application and lending figures, by revealing mortgage seekers’ current thinking as they explore the finances involved in buying or remortgaging.
It shows a visible shift in consumer interest and behaviour over the last year as the mortgage market has exploded into life and the availability of high LTV mortgages has improved.
In the twelve months to March 2013, fewer than one in four mortgage seekers (19%) were looking for loans above 90% LTV. That figure has since leapt to 27% over the twelve months to March 2014, peaking at 29% in Q4 2013 when the Help to Buy mortgage guarantee launched.
At the opposite end of the scale, the percentage of mortgage seekers looking for deals up to 60% LTV has dropped from 33% to 23% over the same period of time.
The surge of interest in mortgages – widely attributed to Help to Buy – has also been linked to rising house prices, but the changing nature of mortgage deals attracting consumer attention tells a different story.
The average property price among mortgage seekers in Q1 2014 was down 7% to £215,782 from £232,729 in Q1 2013. The average loan was down 11% from £157,349 to £140,723.
The general trend over the last twelve months has been for consumers to seek slightly larger loans (averaging £142,375 vs. £139,990 in the twelve months to March 2013, a 2% rise) on cheaper properties (averaging £203,244 vs. £213,462, a fall of 5%).
Since the start of the year, interest has been driven by ‘prime’ borrowers: Q1 2014 saw the lowest percentage of searches by consumers with credit problems (6%) since Q2 2010, down from 8% in Q1 2013.
At the same time, improving conditions have prompted lower earners to show greater interest in getting a mortgage. The average combined income of mortgage seekers has dropped by over £10,000 in the last year from £54,036 in Q1 2013 to £43,964 in Q1 2014: the lowest figure since records began almost four years ago (Q2 2010).
New interest in getting a mortgage has been driven by purchases rather than remortgages: 70% of searches have been for purchase deals over the last year, compared with 60% in the twelve months to March 2013.
Interest in purchase mortgages shot up to 77% in May 2013 from 64% in February 2013 after Help to Buy was first unveiled in the 2013 Budget and the equity loan scheme kicked off in April.
Peaks of 75% followed in October 2013 when the mortgage guarantee began and in January 2014 when more lenders joined the scheme.
However, Q1 2014 has seen interest in remortgage deals at its highest point in over a year, since Q4 2012. More than one in three consumers searched for a remortgage deal (35%), up from 27% in Q4 2013.
This is likely to reflect existing homeowners aiming to secure a better mortgage deal as average mortgage interest rates begin to rise.
Brian Murphy, head of lending at Mortgage Advice Bureau, suggests that the last twelve months have seen consumer faith restored in the mortgage market with thousands finding new hope of securing a deal. Government and lenders have clearly captured the mood and responded to a generational need by offering better options for buyers with relatively small deposits.
He said:
“This evidence suggests that the bulk of mortgage seekers are focused on hunting down loans on moderate sized properties. Lower earners are plucking up the courage to explore their options, and a lot of borrowing interest is coming from consumers with modest ambitions of buying a home, rather than top-end investors chasing a profit from property.
“New regulations arriving this month will support efforts to ensure responsible lending. The changes are getting a lot of attention, but it is important to get the message across that the mortgage market is very much open for business to buyers who can manage their repayments.”
