Mortgage activity slumps 12%
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Mortgage activity dropped by 12% in August as funding issues and fears over a double dip recession continue, says the National Mortgage Index.
The average purchase loan size fell by 7.3% to just £129,270.
And there was a big rise in London residents choosing fixed rate deals.
Purchase mortgage applications fell by 10.8% and remortgage applications collapsed by a whopping 15.3%.
July registered only a 0.3% fall in total mortgage applications and only a 1.3% drop-off in purchase applications compared to June as August figures are blamed on the summer lull.
Regionally, the most significant drop off in purchase mortgage applications was in the North of England with a 23.6% fall in applications in August compared to July.
By contrast, the North West actually saw a surprising 9.4% rise in mortgage applications in August compared to the previous month.
The average LTV on purchase mortgages dropped from a six-month high of 71.1% in July to 70.2% in August, while the average loan size for purchases dropped 7.3% from £139,404 in July to £129,270 in August.
Average LTVs on remortgages rose from 55.6%in July to 56.9% in August, although average remortgage loan size fell 6.5% in the same period, from £143,821 to £134,416.
Regionally, the average LTV on purchases arranged in August was highest in Wales at 81.2% and lowest in the South West at 67.8%.
August saw 41.5% of applicants choosing a variable rate mortgage compared to 38.8% in July.
The average age of a UK mortgage applicant in August was 37 years, with the oldest applicants in East Anglia , 43, and the youngest in Yorkshire & Humber at 34 years.
The monthly National Mortgage Index has been created by independent mortgage broker, Mortgage Advice Bureau, and London-based independent mortgage broker, Coreco Group.
Brian Murphy, head of lending at Mortgage Advice Bureau, says: “Although mortgage activity typically drops off in August due to the summer holiday period, the decline this year is certainly larger than we would expect on seasonal factors alone.
“We should have a much clearer picture as to how the mortgage market is likely to perform for the rest of the year once the coalition government announces its spending review next month, and many prospective buyers are likely to wait until the details of the review are published before they make a decision on whether to burden themselves with more debt.”
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Readers' comments (8)
Maurice Edgington | 10 Sep 2010 4:25 pm
More first time buyer products are needed to accelerate demand. This will help prices up or stabilise then lenders will see that their lending risk is justified and consumers will get back some confidence. Until then nothing changes.
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Ian Evans | 10 Sep 2010 4:44 pm
More 'easy lax credit' products are not needed for the long term financial health of this country. Prices need to drop and fall in line with historical long term median single salaries. That will accelerate demand and avoid the immorally high indebtedness of future generations to bail out current heavily MEWed mortgage holders and banks.
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jon | 10 Sep 2010 6:16 pm
nothing apart from a spectacular housing market price correction towards sustainable lending levels. Us potential ftbs will be sitting this one out thanks
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Gavin | 10 Sep 2010 6:32 pm
House prices are far too high and unsustainable. Prices need to fall to encourage first time buyer activity. Lending criteria is fine and the size of deposits needed will fall as house prices fall. High deposits are needed at present to compensate for people overpaying on a falling asset otherwise we will trigger a bigger banking crisis which with bankrupt our country.
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Anonymous | 10 Sep 2010 9:27 pm
But we don't want prices to go up. They are already far, FAR too expensive. First time buyers will appear as if by magic once houses are back at sensible multiples of typical FTB salaries.
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Anonymous | 10 Sep 2010 10:27 pm
When house prices drop to their long term average, a fall of some 25% or more, then the problem will solve itself! Anyone who suggests that the 'solution' is to borrow and get more people into greater debt, is clearly struggling with reality and has a vested interest!
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Ancient Wisdom...is a mortgage broker in N3. | 13 Sep 2010 8:26 am
Welcome to the new era of cautious lending - it's here to stay.
Next headline: Houseprices fall 9% 2010.
Thank You
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Anonymous | 14 Sep 2010 10:42 am
How do you expect those FTB's from 2006/07 to sell their entry level properties when this dramatic price crash or 'price correction' you are foretelling happens?
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