SEPTEMBER 2012: MARKET HOLDS UP DESPITE OLYMPIC ACTION AND SUMMER HOLIDAYS
•
Applications down 4.16% in August compared to July
•
84% of remortgage borrowers electing to fix – the highest level for over three years
NATIONAL MORTGAGE REVIEW:
Applications for purchase and remortgage borrowing have continued to fluctuate in the second half of the year, dropping
back slightly in August after the rise in activity recorded in July, according to the most recent National Mortgage Index.
The Index, which is compiled by the UK’s leading independent adviser, Mortgage Advice Bureau, using data from
more than 500 brokers and 800 estate agents in England and Wales found applications for purchase and remortgage
borrowing dropped by 4.16% in August following the 14.6% rise in July.
Purchase data
Despite the traditional summer lull, exacerbated this year
by the Olympics and the Paralympics, mortgage activity
actually held up surprisingly well in August and purchase
activity is still 14% higher than it was at the beginning of
the year.
Over the last eight months the average loan-to-value
(LTV) has steadily been coming down, and despite a rise
to 70.4% in July, this fell back to 68.7% in August – just
0.5% higher than June’s figure.
Interestingly, the size of the average deposit* on
applications continued to decrease in August, maintaining
the reversal of the trend of continuous increases over
the year which stopped in July. This continued to fall in
August, dropping from £66,832 to £65,518. However this
still represents an increase of 17% since January, when
it stood at £56,167.
In the last 12 months the size of the average deposit has
increased by 15% from £56,977.
The average size of mortgages for purchase business*
being applied for this year has generally been increasing,
with a rise of 5.84% since January. However over the
summer there has been a slide in the average purchase
mortgage from £148,608 in July to £146,422 in August –
a 1.47% drop.
Similarly, although average purchase prices are still up
9.18% from January, the average purchase price has
also decreased, with prices in August down 0.29% on
July, and down 4.72% on June’s figure of £218,619, at
£208,295.
The average income* of borrowers making purchase
applications increased again in August albeit only slightly,
rising 0.11% since July (from £38,353 to £38,397 in
August). However, year-on-year figures show the average
income* of borrowers making purchase applications has
risen 11.78% since August 2011.
The
percentage
of
borrowers
making
purchase
applications who are selecting fixed-rate deals has risen
again, climbing 3.8% to 83.1% in August. This is the
most popular that fixed rates for purchase business have
been since June 2009 (89.6%) and has been increasing
steadily since May this year when it dropped as low as
75.9%.
Affordability data
Affordability – as an average annual income as a
percentage of purchase prices – is down on July’s
peak, falling slightly from 18.97% to 17.45% in August.
There has been little change in affordability in 2012, with
affordability in January standing at 18.08%. Average
annual income as a percentage of loan value has also
varied little this year, decreasing slightly from 26.95% in
July to 25.41% in August.
Average mortgage rates** fell again in August, with the
average two-year fixed rate and five-year fixed rate
mortgages experiencing a slight decrease. All changes
were marginal though; the biggest shift was a decrease of
0.14% from 4.87% in July to 4.73% in August in five-year
fixed rates. The average three-year fixed rate remained
static at 5.02%, although this is still up from 4.53% at
the start of the year. The only rise in average rates was
a 0.05% increase in the average two-year tracker rate,
rising from 3.82% in July to 3.87% in August.
The average number of mortgage products*** available
to intermediaries continued to increase in August, rising
from 5,465 in July to 5,838 in August – an increase of
6.83% - although it is still 11.24% behind the 6,577
“August saw borrowers increasingly opting for
fixed rates with 83.1% of house purchasers and
84% of remortgage customers electing to fix.
Incidentally, these are both the highest proportion
of fixed rate take up since July 2009, suggesting
that borrowers are seeing real value in the price
and security that fixed rates currently offer.”
Brian Murphy, head of lending at
Mortgage Advice Bureau
mortgage products available in January.
The number of direct only products has also increased
slightly, climbing up from 2,271 in July to 2,462 in August,
an increase of 8.41%. The number of direct only products
is now 18.71% higher than it was at the beginning of
2012 (2,074 in January).
Regional data:
Purchase loan sizes* for Greater London properties
continued to pick-up after a three month slide between
April and June. August saw a 6.41% increase to
£297,454 from £279,534 in July, and is now 7.81% higher
than January (£275,915). This was the biggest increase
nationally.
Regionally the UK was split 50/50 over purchase loan
size*, with half the regions reporting increases and the
other half experiencing a fall. The South West saw the
greatest fall, down 11.93% to £131,058 in August from
£148,807 in July. The North, Yorkshire & Humber, the
South East and Wales also experienced dips. Yorkshire
& Humber experienced the second greatest drop from
£108,514 to £101,814, a decrease of 6.17%.
After Greater London, the East Midlands saw the biggest
increase in purchase loan size with a climb of 5.23%
from £97,650 in July to £102,759 in August. The North
West and East Anglia also saw rises. The West Midlands
experienced the least amount of change, with figures
staying nearly static between July (£111,928) and August
(£112,338), with an increase of just 0.37%.
Remortgage data:
The average LTV in remortgage cases has climbed
back above the figure at the start of the year,
increasing from 56.7% in July to 58.7% in August, and
surpassing the LTV rate in January of 57.7%. The size
of the average remortgage loan* rose from £150,389
in July to £153,574, in August, which is an increase of
2.12%. This also meant the average remortgage loan
was 3.47% higher than at the beginning of the year.
At the same time, the amount of equity* being put
forward
on
remortgage
applications
dropped
substantially falling 10.66% from July’s £131,290 to
£117,295 in August.
The percentage of remortgage applications for fixed
rate deals in August rose again, climbing from July’s
high of 76.8% to 84.2%, to become the highest of the
year by 7.4% – 15.8% up on January’s figure of 68.4%.
NATIONAL MARKET COMMENTARY:
Brian Murphy, head of lending, independent mortgage broker Mortgage Advice Bureau:
“With the nation captivated by the compulsive viewing
borrowers are seeing real value in the price and security
of the Olympic and Paralympic games and considering
that fixed rates currently offer.
August is traditionally the height of the holiday season
“During August, average rates on two and five year fixes
activity levels held up remarkably well during the month.
fell, three year fixes were flat and two year trackers rose
Purchase applications slipped by 5.4% against July
slightly against July. Lenders have continued to compete
but remortgage cases were effectively flat with activity
for business with almost weekly re-pricing by the major
down by just 0.7% compared with the previous month
players and the re-introduction of specific mortgage
and with Santander announcing an increase in their SVR
products available for a finite period, namely ‘ten products
this may have prompted more borrowers to look at their
for ten days’ from Accord.
remortgage options.
“Overall products numbers increased further during
“With the Funding for Lending scheme officially getting
August to approximately 8,300 with a 7% increase in
under way on the 1 August many lenders have started
intermediary deals being a little overshadowed by an
to increase their appetite in the range and number of
8% increase in the number of direct deals over July.
products and by lowering prices. August saw borrowers
Encouragingly for the broker community the increase
increasingly opting for fixed rates with 83.1% of house
of more than 370 intermediary products was the largest
purchasers and 84% of remortgage customers electing
monthly increase since October 2011 and suggests that
to fix. Incidentally, these are both the highest proportion
with several large lenders to date behind their lending
of fixed rate take up since July 2009, suggesting that
objectives they are looking to the broker sector to get
back on plan.”
- Ends -
Notes to Editor:
1. The National Mortgage Index
The monthly National Mortgage Index has been created by independent mortgage broker Mortgage Advice Bureau
to provide the most comprehensive overview of the UK mortgage market by an independent mortgage broker.
2. For more information contact:
Ben Marquand, The Wriglesworth Consultancy, T (020) 7427 1400 F (020) 7427 1410
E [email protected] W www.wriglesworth.com
3. Breakdown of regions
North: Northumberland – Cumbria – Tyne & Wear – Cleveland
Yorkshire & Humber: North, West and South Yorkshire – Humberside
North West: Lancashire – Greater Manchester – Merseyside and Cheshire
East Midlands: Derbyshire – Notts – Lincs – Leicestershire
West Midlands: Shropshire – Stafford – West Mids – Warwickshire – Hereford & Worcester
East Anglia: Norfolk – Suffolk – Cambs
South East: Essex – Herts – Beds – Bucks – Oxon – Berks – Surrey – Hants – West & East Sussex – Kent
South West: Glos – Avon – Wilts – Somerset – Devon – Dorset – Cornwall
Wales: All
Greater London: All
4. About Mortgage Advice Bureau
MAB was established in 1995, and has been voted the UK’s best mortgage brokers by the public and the mortgage
industry in both 2010 and 2011. MAB have over 500 advisers right across the UK, arranging in excess of £3bn
of mortgages pa. MAB work with over 800 estate agency branches across the UK, and our results will to a large
degree reflect UK purchase activity/trends.
www.mortgageadvicebureau.com
* Based on Three-month rolling average
** Based on Moneyfacts data
*** Based on TrigoldCrystal data