Rising from 63.6% in October to 65.7% in November. This compares with just 46.3% of applicants choosing fixed rate deals back in January 2010.
However, the number of people choosing fixed rate mortgages is significantly below the 90% who chose fixed rate over variable rate products back in May 2009, at the end of the raft of interest rate cuts by the Bank of England, when rates fell to an historic low of 0.5%.
It appears that with the mortgage landscape in 2011 predicted to be just as tough as 2010, this sentiment is weighing heavily on mortgage applicants’ minds. Irrespective of the general view that interest rates are likely to remain low for some time, many applicants probably want the peace of mind, as we move into a New Year, of knowing they are protected from future market uncertainties.
The availability of mortgage finance remains tight with average LTVs on purchase mortgages dropping slightly from 70.4% in October to 70.1% in November. Average purchase LTVs have not ventured above 71% all year. Meanwhile, the average loan size for purchase mortgage applications increased from £123,982 in October to £126,162 in November, a rise of 1.8%.
The average deposit put down by a purchase mortgage applicant in November was £37,722 compared to £36,699 in October.
In terms of total mortgage applications (purchases and remortgages), activity was up 23.4% for the year to date compared to the same period in 2009. However, mortgage activity, month-to-month, continues to be unpredictable, as a tough year for the mortgage market as a whole draws to a close.
November 2010 saw purchase mortgage applications increase by 4.6% compared to October 2010. This follows an 11.4% fall in October compared to September 2010 and a 14% rise in September compared to August 2010.
As with the major property market indices, this ‘up one month, down the next’ trend is indicative of an uncertain market and mortgage activity that remains at historically low levels. Purchase mortgage applications in November 2010 were 1% down on applications in Nov 2009.
Remortgage activity fell by 6.5% in November compared to October. The average LTV on remortgage applications rose only marginally from 55% in October to 55.1% in November, while the average remortgage loan size increased by a substantial 27.5% in November to £166,899 compared to £130,913 the previous month.
REGIONAL MORTGAGE REVIEW:
Three-quarters (75.2%) of applicants in the South West chose fixed over variable rate purchase mortgages in November, compared with just 51.1% of applicants in Wales choosing fixed rate deals.
The average LTV on purchase mortgages in November was highest in Yorkshire & Humber (76.6%) and lowest in the North West (65.3%), while six out of nine areas saw average loan sizes fall in November compared to October.
Purchase mortgage applications rose in six out of nine areas in November compared to October, with the South West (45.5%) experiencing the biggest increase. The North West saw an 8% fall in mortgage applications, compared to October.
For remortgages, 75.8% of borrowers in the South West chose fixed rate deals in November, compared to only 38.5% of borrowers in Wales. The average LTV on remortgage applications in November was highest in East Anglia (72%), and lowest in Wales (41.6%).
The North West (36.1%) saw the biggest fall in remortgage applications in November 2010 compared to October 2010, while Wales saw a surprising 85.7% increase in applications over the same period.
The oldest mortgage applicants in November were in the South West (40 years) and the youngest in the East Midlands (36 years).
NATIONAL/REGIONAL MARKET OVERVIEW:
Brian Murphy, head of lending, Mortgage Advice Bureau, said:
“With the almost month-on-month reduction in fixed rate pricing during 2010, it is no surprise to see almost two thirds of borrowers have gravitated towards fixed rates. In addition, consumer confidence is relatively low due to still uncertain economic and employment conditions and therefore borrowers are increasingly opting for the security that fixed rates offer.
“The purchase market recorded a slightly surprising but welcome small increase in activity during November over October. Having witnessed a fall in October from September followed by last month’s increase this reflects the slightly disjointed nature of the current market as generally at this time of year purchase market transactional numbers would be falling month on month.
"With the Christmas period almost upon us we would expect to see activity levels retreat a little further during December.
“Although dropping back a little from the relative high point of October, remortgage activity still accounted for almost one in three transactions providing further evidence that more borrowers are seriously now re-entering this sector of the market.
“With mortgage product numbers increasing slightly again in November to more than 5,100 deals available to the typical mortgage intermediary (another post credit crunch high), and rates remaining at exceptionally competitive levels, borrowers both buying property and refinancing existing deals appear to be taking advantage of current pricing.
“Once again, average 5-year fixed rate deals have fallen slightly to 5.29% from 5.32% last month and 2-year deals also edged down a little further to 4.37% from 4.48% the previous month.
"Trackers also continue to offer great value with the average 2-year tracker down to 3.46% and with products that allow borrowers who choose to take advantage of lower tracker rates in the short term but with the facility to switch into a fixed rate without penalty if rates do start to edge up, these bor
