In the field of Mortgage Purchase Index series, the Legal & Generals third report study shows a trend revolving over 19,000 mortgage applications that were made in the last quarter.
Q3 Key Findings:
* There was an increase of 24% on mortgages in the last quarter as 35% of residential borrowers took mortgages at variable rates in the last three months. * 63% of people took mortgages at fixed rate which is down from the 75% in the last quarter. Though the figure suggests that there was a decrease in fixed rate mortgage yet it is highly popular among the residential borrowers. * 55% of the buy-to-let borrowers took variable rate mortgage as compared to 43% of the fixed rate mortgages. This figure clearly shows that the variable rate mortgage is more popular among the buy-to-let borrowers. * In the last quarter the average residential mortgage was just 60% loan-to-value.
*There has been a decrease in the two year fixed rates while three, five and ten year products are more costly.
Stephen Smith, Director of Housing at Legal & General said: As suspected, the popularity of fixed rate mortgages peaked last quarter when we found that three-quarters of borrowers were taking this type of mortgage, compared to 63% in Q3. Trackers will have attracted greater attention as forecasts of base rate cuts become more prominent. The popularity of variable rates has also perhaps been boosted by the number of borrowers sticking with their lenders standard variable rate when they came to the end of a deal rather than remortgaging straight away. This approach of sitting on the fence is a sign of the times and would have been unheard of a year or so ago. Fixed rates over the past three months have been expensive compared to the beginning of the year, although two-year deals have dropped somewhat recently.
The average residential borrower has been able to put up a 40% deposit, which indicates that whilst there are many people with healthy levels of debt, there are now far fewer mortgages being offered with high LTVs. This has lead to the average LTV for residential borrowers falling throughout the year. On the other hand, the average LTV for buy-to-let borrowers has risen from 67% to 73%, showing that cash-rich landlords are taking advantage of the increasing demand for rental accommodation.
Notes to Editors: Data based on 19,140 mortgage applications through the Legal & General Mortgage Club from June to August 2008.
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For more information contact: Joe Wiggins PR Manager Protection and Housing t:01737 375 351 m:07841 366 145 f:01737 374 275 e: joe.wiggins@landg.com
Contact Details: Berni Ryan Web Site: http://www.legalandgeneral.com Email: joe.wiggins@landg.com Tel: 01737 375 351
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