The rebound in remortgage activity continues but purchase activity remains weak.
The latest mortgage index from John Charcol confirms the recent trend for a sharp increase in the popularity of fixed rates, which has been a major factor in the ongoing boost to remortgage activity. Ray Boulger, senior technical manager at John Charcol, comments on this and other findings.
“With this month’s John Charcol Index we have included figures for the 2009 and 2010 calendar years. These show that in 2010 purchase business increased to 54.2 per cent from 2009’s 48 per cent, but a close look at the monthly figures shows that the pretty steady increase from the floor of 31.8 per cent in February 2009 peaked in July 2010 and is currently hovering around the 45 per cent level. The low point in February 2009 also marked the most recent low point of the real Nationwide House Price Index and the peak of 52.1 per cent in July last year was just one month after last’s peak for that index, suggesting a close correlation.
“However, it is not quite as simple as that because remortgage activity started to improve in the second half of last year as increasing numbers of borrowers started to get nervous about an increase in interest rates. People are not likely to remortgage if they anticipate moving within a few months and so the low level of activity in the housing market is another factor likely to continue influencing the remortgage market, although we estimate that for at least a third of all borrowers a remortgage is out of the question, either because of insufficient equity in their property or because they can no longer meet lenders’ much tougher criteria.”
