CML figures showing a 19.5% increase in March show the mortgage market is still strong and not deflating in 2004, says The MarketPlace.
Elliot Nathan, mortgage development manager for The MarketPlace at Bradford & Bingley, says: “It is encouraging to see that the proportion of first time buyers is increasing, albeit at a very moderate pace.
“Accounting for 31% of the total lending, the figure is still lower than its historical norm of 40-45%, but at least it is heading in the right direction. It is also worth bearing in mind that in terms of actual numbers, 34,000 entered the market this March compared with only 30,000 at the same time last year. This is an encouraging increase of 13%.”
“The high proportion of lending on variable rates, nearly three-quarters of all lending, clearly demonstrates that price is still the key driver in the market. When the gap between fixed rate and variable rate pricing is narrow, then borrowers normally opt for the security that a fixed rate offers.
“However, when the gap increases and fixed rates become more expensive as they have been for the whole of this year variables become the product of choice. Even, the expectation that interest rates may rise further over the coming months has done little to persuade borrowers to protect their monthly payments with a fixed rate deal.”