MARKET SHOWS CONTINUED SIGNS OF RECOVERY AS PURCHASES OVERTAKE REMORTGAGES FOR THE FIRST TIME SINCE 2007

Posted on 17 June 2009 by Drew

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Things are moving in the housing market again, according to the John Charcol Index, the monthly mortgage activity monitor from John Charcol, the UK’s leading independent mortgage adviser, which shows a sharp increase in purchase activity this year.  

In 2008 purchases made up an average of 25% of our business, however 2009 is a very different story. Purchases have taken an increasing share over the course of the year to date, hitting 53.4% in May. Furthermore enquiries for new business have risen sharply over the last few months, particularly for purchases, and in May the proportion of mortgage enquiries for a purchase was up to 59.7%, compared to 49.0% in April.  This suggests that as these enquiries translate into actual business the proportion of purchases in our business written will continue to rise over the next few months.  It seems that the market is continuing to show positive signs of recovery.

Fixed rates still the product of choice

Although the take up of fixed rates is very slightly down from last month, they still account for some 79% of all mortgages arranged through John Charcol in May.  This highlights that people are keen to seek refuge from the stormy economy and ensure they know exactly what they are paying each month for the foreseeable future.  However, with the recent dramatic move north in fixed rates, next month’s figures will be particularly interesting.

The John Charcol Mortgage Index is published monthly, tracking three important statistics, based on mortgage business written by John Charcol.  The index is a leading indicator of trends being based on mortgage applications submitted to lenders, whereas figures reported by the Council of Mortgage Lenders (CML) and the Bank of England (BofE) are based on completions, which typically take place 2-3 months after the mortgage application is submitted.

The three statistics tracked each month are the percentage split:
•    Between Fixed rates, Capped rates and Tracker/Discount rates.
•    Between Purchases and Remortgages.
•    Of First Time Buyers compared to all Purchasers.

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