Fixed rates becoming more popular
Applications for tracker mortgages faltered for the first time since April 2009 with February seeing a 4% increase in applications for fixed rate mortgages compared to January 2010, which represented 57% of applications overall.
Despite speculation on the long-term economic outlook, the activities of over 700 Countrywide Mortgage Consultants operating throughout the UK have revealed that the number of mortgage applications in February increased by 34% on last month, a 6.6% increase on February 2009.
The average interest rate of Countrywide’s top 10 mortgage applications for February fell by 0.26% to 4.52% compared to January 2010 – a fall of 0.79% since February 2009.
The findings also reveal that customers are opting for bigger deposits, which are now 22% on average – 3% up on January 2010 and an increase of 2% compared to February 2009.
Grenville Turner, Countrywide’s group chief executive, said: “It is encouraging to see the average interest rate of our most popular products fall as customers gather up larger deposits. This shows more commitment from major lenders to competitively price their products and provide the best rates for those with the biggest deposits.
“We may also be seeing a return of home movers entering the market as larger deposits typically come from home movers using the equity from their property to fund their move.
“As speculation mounts over house prices and inflation it is interesting to note that we’ve seen a marginal uplift in the volume of fixed mortgage applications. Tracker products have enjoyed a significant resurgence in popularity over the last 9 months and now make up around half of all new mortgages, however the forthcoming election could unsettle the market and impact any economic recovery and customers are increasingly looking for the certainty of a fixed rate mortgage.”