Repayment mortgages at record high
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Some 77% of residential mortgages introduced during Q1 2011 were capital repayment mortgages - the highest proportion since 1996, shows Paragon Mortgages’ Financial Adviser Confidence Tracking Index.
The panel survey of approximately 200 intermediaries found the proportion of repayment mortgages was up from 71% recorded during Q4 of 2010 and has been rising since Q3 2007 when it hit a six-year low of 57%.
Conversely, interest-only continued its downward trend. Just 14% of mortgages introduced during the quarter were interest-only, the lowest proportion since Q1 of 2004 and down from a high of 28% recorded during the Q3 of 2007.
John Heron, managing director of Paragon Mortgages, says: “FACT shows that residential mortgage lenders have been clamping down on interest-only since the start of the credit crunch and the decline of this market shows no signs of slowing down.
“The Financial Services Authority signalled the demise of interest-only through changes proposed in the Mortgage Market Review and it appears that lenders are positioning their businesses in anticipation of regulatory changes.”
Mortgage intermediaries reported a strong increase in the number of residential mortgage applications submitted during the quarter. Paragon Mortgages’ research shows that the average number of mortgages introduced per office was 15.7 during the first three months of the year, up from 14.7 in the final quarter of 2010.
Looking forward, intermediaries expect to introduce a greater level of mortgage business during the second quarter of the year.
On average, intermediaries expect to do 5% more business during the period than they did in the first quarter. FACT shows 16% of intermediaries are forecasting a business increase of more than 10%, with 17% pencilling in an increase of between 6% and 10%. Just 6% of intermediaries forecast a fall in business levels.
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