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Variable rates wane in popularity
13 August 2010
The popularity of fixed rate mortgages has risen sharply in the last three months, accounting for more than 60% of new loan applications, according to the inaugural National Mortgage Index. The index covering England and Wales, created by brokers Mortgage Advice Bureau and Coreco Group, showed that the proportion of purchase and remortgage borrowers choosing variable over fixed rate deals in March this year was 53.9% across the country. However, by July the level of new mortgage applications for variable deals fell to 38.8% of all deals, as borrowers switched to fixed rates. The National Mortgage Index also showed that the average LTV for house purchase has risen above 70% for the first time since February 2010, reaching 71.1% in July compared to 67.5% in June. In addition, the average loan size in July increased 6.7% to £139,404, the highest amount since 2007. Average remortgage LTVs rose more modestly from 53.8% in June to 55.6% in July. However, the average remortgage loan size fell 4% in the same month to £143,821. Brian Murphy, head of lending at Mortgage Advice Bureau, said: "Borrower appetite for variable rate mortgages is waning and fixed rates are now the overwhelming choice. "Rising average LTVs are confirmation of growing competition among lenders and a renewed appetite to lend. On a regional level, there is great variation in average LTVs across the ten regions, with average LTVs rising since the start of the year in three regions and falling in seven regions." The highest average LTV regionally in England and Wales was in East Anglia at 78.7% up from 63.2% in January 2010, while the lowest average LTV was in the South West at 64.3% down from 69.4% at the beginning of the year. Published by Mortgage Solutions
