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UK Homemovers Fix Their Mortgage Rates As Confidence Remains Fragile
UK Homemovers Fix Their Mortgage Rates As Confidence Remains Fragile
The latest figures show UK homeowners are choosing to fix their mortgage rates in anticipation of a rate increase.
Leighton Buzzard,
Bedfordshire,
United Kingdom
(prbd.net)
23/07/2010
"Despite the Bank of England's best efforts to hold base rates at a record low of 0.5 percent, the mortgage market remains in an extremely fragile state. Overall mortgage approvals are up by 9 percent which sends a strong signal to the industry."
The latest mortgage market figures indicate that 72 percent of all applications in June were for fixed mortgages as UK homemovers anticipate future rises, according to Countrywide, the UK's largest mortgage broker and property services Group.
The activities of Countrywide's 700 mortgage consultants reveal a huge shift in favour of fixed interest rate products, which have reached levels not seen since October 2009. The split between fixed and tracker applications has jumped 19 percent since January 2010, with a 7 percent increase in the last month alone.
The figures suggest that homemovers appear to be prepared to accept the higher interest rates that typically come with fixed rate mortgages.
Overall the average interest rates of Countrywide's Top 10 mortgages in the first six months of 2010 was 4.62 percent, a 0.67 percent decrease from the same period in 2009 when the average interest rate was 5.29%.
Remortgage customers are also opting for fixed rate products in 78 percent of mortgage applications – a 4 percent increase on the previous month and a 10 percent increase in Q2 2010 compared to Q1 2010.
Grenville Turner, Countrywide's Group Chief Executive said;
"Despite the Bank of England's best efforts to hold base rates at a record low of 0.5 percent, the mortgage market remains in an extremely fragile state. Overall mortgage approvals are up by 9 percent which sends a strong signal to the industry and lenders have also increased the volume of products available by 193 percent compared to June 09, which provides some reassurance.
"The popularity of two year mortgages over longer-term products indicates that any nervousness over unemployment and government spending cuts is currently a short-term concern."
Grenville added: "The recent Bank of England Credit Conditions report revealed that lenders are becoming nervous about the cost of wholesale lending – if this transpires into the mortgage market through tightened lending criteria, we will see a significant impact that could damage any chance of a recovery in the property and mortgage markets."
Research highlights for June 2010 (based on the percentage of overall lending versus May 2010):
* UK mortgage applications: Applications for 2 year mortgage terms generated the highest volume of applications in June 10 – a decrease of 1 percent compared to the previous month and an increase of 31 percent on June 09. Overall, 80 percent of mortgage applications made in June 10 were for 2 and 3 year products – a decrease of 3 percent from May 10 and a 19 percent increase on June 09.
* Interest rates: The average interest rate of Countrywide's Top 10 Mortgage Applications was 4.81 percent in June 10 (taking into account both transactional and remortgage customers) up 0.44 percent from May 10 and a 0.45 percent decrease on June 09.
* Loan to value (LTV): The average minimum deposit required for Countrywide's Top 10 Mortgage Applications was 23 percent in June 10 – a 1 percent increase on May 10 and an increase of 2 percent on June 09.
* Remortgage market: Fixed rate mortgages remain the most popular type of remortgage product with 78 percent of remortgage applications in June 10 being fixed rate products – an increase of 4 percent from May 10.
* Buy-to-let mortgages: 40 percent of buy-to-let mortgage applications in June 10 were tracker rates – a decrease of 5 percent on May 10 and a 20 percent increase on June 09.
* Early indications: Countrywide's Most Sourced Mortgages show that currently 8 out of the ten most sourced mortgages are for fixed rate mortgages with 7 products at 85 percent LTV or above.
Countrywide is the UK's largest estate agency and property services Group , operating more than 1,200 associated branches across England, Scotland and Wales. To buy property or sell property through Countrywide, visit http://www.propertywide.co.uk
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Countrywide is the UK's largest and most successful estate agency and property services Group,
operating more than 1,200 associated branches across England, Scotland and Wales.
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