Mortgage applications up 14% in January

Countrywide’s monthly rental market report shows mortgage applications rose sharply in January 2010, up 14% on December 2009 and a 12% increase on January 2009.

More competition between lenders for the returning first-time buyer market has also resulted in a new wave of high LTV products dominating its the Top 10 mortgage applications for January.

The results are based on the activities of nearly 800 Countrywide mortgage consultants operating throughout the UK.

They found that eight products in the Top 10 mortgage applications for January were designed with first-time buyers in mind – four of which were 90% LTV.

The increasing number of 90% LTV mortgage products has pushed up the average interest rate of Countrywide’s Top 10 mortgage applications to levels not seen since July 2009.

The average interest rate has increased from 4.29% in December 09 to 4.78% in January 2010.

Countrywide’s findings also support recent reports that indicate a number of lenders have pushed up their standard variable rates, which might finally tempt remortgage customers.

One consequence of this action is the increase in remortgage applications with Countrywide seeing a 3% increase in January 2010 compared to December 2009 – the highest level since June 09.

Grenville Turner, group chief executive of Countrywide, says: “Activity in the market is on the up with our estate agency division reporting a 32% increase in new buyer enquiries.

“Lenders are also moving in the right direction and our broker network has noted that there are now 85 percent more mortgage products available compared to the same period last year. 

“While the overall interest rate of Countrywide’s Top 10 Mortgage Applications has increased, this is attributed to the strong return of high LTV products with four 90 percent LTVs pushing up the average interest rate, as the best deals are reserved for those with the biggest deposits.

Grenville adds: “Improved lending conditions and competitive pricing is offset by the reality that customers with a 10% deposit could pay up to 2.1%  more in interest, as opposed to those who can afford a 20% deposit.

“That said, from a first-time buyer perspective, things are becoming more affordable and in the last few weeks we’ve seen a three year product originally priced at 6.59% drop to 5.89% and as first time buyers underpin the market, we hope more lenders will do the same.”