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Mortgage apps rise by a fifth in 2011

Robyn Hall

October 13, 2011

The data from Mortgage Advice Bureau shows that total mortgage applications in Q3 2011 were also 28.6% higher than the corresponding quarter in 2010.

Mortgage applications last month were up 8.5% up on applications made in August.

The percentage of applicants choosing fixed rate deals in September was 73.3%, compared to 68.9% in August.

The average loan size on mortgage applications in September was £140,113 compared to £135,397 in August.

The average loan to value (LTV) on mortgage applications in September was 71.8% compared to 71.4% in August.

The average deposit put down by a mortgage applicant in September was £55,030, compared to £54,235 in August.

The average age of a mortgage applicant in the UK in September was 37 years 2 months and the average salary of a mortgage applicant was £35,806.

REMORTGAGES

With the summer holiday season drawing to a close, September saw a predictable and expected bounce in remortgage activity, with a 12% increase in applications. Numbers of applications were also up 45.1% in September compared to the corresponding month last year.

Of those homeowners who remortgaged in September, 62.1% chose fixed rate deals compared to just 59.4% in August. The average loan size of remortgage applications in September was £143,213 compared to £151,015 in August.

The average LTV on remortgages was 59.6% compared to 61.9% in August.

REGIONAL

Across the regions, mortgage application numbers rose in seven out of nine regions in September compared to August, with the South West experiencing a 41.8% increase in applications last month compared to the previous month.

The average loan size on mortgage applications in September was highest in the South East at £163,007 and lowest in the North at £88,360. Average loan size was below £100,000 in just two out of the nine regions.

In terms of product type, 81.5% of applicants in the North West (see table in Notes to editor) chose fixed rate mortgages in September, compared to 56.6% in Wales. Average LTVs in September were highest in the East Midlands (75.7%) and lowest in the East Anglia (68.7%).

The oldest mortgage applicants in September were in East Anglia, averaging 38 years 8 months, while the youngest were in Wales, averaging 35 years 2 months.

Unsurprisingly, borrowers are still having to put down sizeable deposits in order to secure mortgage finance. For example, in the South East, South West and East Anglia the average deposits put down by borrowers in September were £69,860, £55,776 and £48,539 respectively.

REMORTGAGES

For remortgages, 71.7% of applicants in the North West chose fixed rate deals during September, compared to just 47.8% applicants in the Yorkshire & Humber region. The average LTV on remortgage applications in September was highest in the Yorkshire & Humber region (78.5%) and lowest in East Anglia (46.7%).

LONDON

Mortgage applications (excluding remortgages) were up 72.1% in September compared to the corresponding month in 2010, and 44.1% higher in Q3 2011 versus Q3 2010. Applications are also up 33.6% for the year to date, compared to the same period last year.

The majority of mortgage applications (55.6%) in September were for fixed rate deals compared to 48.5% in August.

The average LTV on mortgage applications in September was down slightly to 69.6% from 72.1% in August. The average mortgage loan size in September was £328,742 compared to £311,248 in August.

The average age of a purchase mortgage applicant in London in September was 37 years 4 months.

On the remortgage side, the average LTV on remortgage applications in September was 58.3% compared to 48.7% in August, while the average loan size last month was £278,877.

The number of remortgage applicants choosing fixed rate over variable and tracker rate deals in September was just 42.9% compared to 53.8% in the previous month.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Unusually, activity in the first three weeks of September was running at a slower pace than in August.

“However, we saw a noticeable pick-up in applications, both homebuyers and remortgage borrowers in the latter part of the month.

“While the trend during the last few months had seen a movement back towards variable rates, as borrowers seemed more certain that rates would remain low, September actually witnessed an increase in fixed rate mortgage applications. With the crisis continuing to unfold in the Eurozone, borrower confidence would appear to have weakened, as new applications suggest that borrowers are once again reverting back to the relative safety that fixed rates offer. The decision on whether to fix or not has been assisted by lenders offering some very attractive deals in the past few weeks.”

And he added: “Although consumer confidence generally remains low, September witnessed the second highest level of monthly remortgage activity this year, suggesting that more people are taking advantage of what remain unprecedented low mortgage interest rates. This even extends to the high loan to value arena, with mortgage product pricing at 90% loan to value reaching the lowest level seen in three years (Moneyfacts).

“Although capital constraints on lenders means loan to values remain at lower levels relative to the previous boom years, last month recorded the second highest average loan to value this year at 71.8% – a figure that was higher than any one month in 2009 and 2010.

“Product numbers also experienced something of a lull in the first three weeks of September, with the number of deals slipping back a little before making a late surge. September product numbers averaged 6,800 intermediary and 1,600 direct, deals but intermediary deals have increased to more than 7,300 in the last week very similar to August.”


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