Pent up mortgage demand met with falling rates
Mortgage activity bounced back strongly in July, with borrowers defying weak economic data and taking advantage of the increase in competitive products, according to the latest National Mortgage Index from independent mortgage broker Mortgage Advice Bureau (MAB).
Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index found application activity for both purchase and remortgaging rose in July, up 14.6% from June.
Following the latest round of quantitative easing and ahead of the launch of the ‘funding for lending’ scheme a number of lenders launched more competitive mortgage products in July.
As a result there was renewed appetite among borrowers, and the average loan-to-value on purchase applications rose to 70.4% in July from 68.2% in June, halting six straight months of falls.
As a consequence the average deposit on applications fell to £66,832 from £67,512 in June.
The rate on the average two-year fix fell from 4.72% in June to 4.68%, and was joined by the average five-year fix which dropped from 4.9% to 4.87% in July.
Brian Murphy, head of lending at Mortgage Advice Bureau, commented: “Mortgage activity levels are still volatile from month to month, and this pattern looks set to continue for some time to come. Application levels increased significantly last month following the washout in June, but they were still below the peak we saw in May.
“Last month saw lenders launch a rash of competitive products in advance of the ‘funding for lending’ scheme. We hope this will stimulate more lenders to increase lending targets and launch more competitive products in the coming months.
“The fantastic London Olympics in August will create a temporary halo effect across many industries, but as mortgage activity traditionally slows during this month we are expecting a return to stability this month rather than another big increase.”