House purchase loans slump 11%, reveals Hamptons Mortgages

Home purchase loan completions increased 11.49% last month, reveals Hamptons Mortgages.

Its February best buy mortgage tracker reveals that house purchase loans represented 26.34% of the broker’s completions in February compared with 14.85% in January.

But the numbers were down on last February when house purchase loans represented 35.14% of the broker’s client applications, which it says is evidence that while there is increased optimism amongst home owners, not everyone is ready, or able, to venture out into the property market.
The proportion of home remortgage loans also increased by just over 7% to 26.34% last month, further fuelling the theory of restored consumer confidence.
But buy-to-let purchases decreased by over 16% to 28.49% while buy-to-let remortgages decreased to 17.74% in February compared with 18.34% in January.

Hamptons Mortgages says that these two decreases indicate that the chancellor’s recent Capital Gains Tax announcement has potentially spurred investors with few properties to sell up and exit the market before they miss out on taper relief of 24% after 10 years’ ownership.

But tightened lending criteria means that many amateur investors are choosing not to purchase.
Hamptons figures also shows that the proportion of Hamptons customers opting for 2 year variable rate mortgages has decreased by a massive 21% in the last month (28.93% February 2008 – 50.79% January 2008), while 2 year fixed rate mortgages have increased by just over 4% since January (17.48% February 2008 – 13.16% January 2008). This comes at a time when the MPC decided to decrease the base rate twice in the space of three months and may be a sign that customers are unwilling to opt for fixed rates in the hope that future cuts will mean they are better off on tracker deals.
Jonathan Cornell, managing director at Hamptons Mortgages says:
“It is good to see that home owners are venturing back into the housing market. I think that the recent base rate cuts in December and February have instilled some much-needed confidence back into the sector and this, combined with the fact that house prices have fallen in the last month, has generated optimism amongst homeowners to step onto the property ladder.
“But taking into account recent events in the mortgage market, only time will tell what impact this will have on consumer confidence. I would imagine that next month we will see yet another decline in home purchase as a result of lenders tightening criteria and exiting from the 100% mortgage arena.

“This week’s budget decision regarding Stamp Duty may be the only thing first-time buyers can cling to at the moment.”