The number of products available on the mortgage market grew by a total of 907, the largest monthly increase since April 2011, according to the National Mortgage Index from Mortgage Advice Bureau (MAB).
Two and three year fixed rate deals and two year tracker rates all reached record lows as lenders launched ever more competitive deals.
Using data from more than 500 brokers and 800 estate agents, the Index shows an immediate response from consumers with purchase applications up by 19 per cent in the month and 59 per cent year-on-year.
Rise in average buyer LTV as market opens up:
In line with government ambitions to help buyers with smaller deposits, the average purchase loan to value (LTV) leapt by 3.3 percentage points in October to 72.2 per cent. This is the highest figure since MAB’s records began five years ago in January 2009 and also the biggest monthly change.
Buyers’ average salary also fell to a six month low of £38,887 in October – down 2 per cent from September – suggesting the market is beginning to open up to a wider range of house hunters.
A number of regions saw more significant changes with lower earners better served by the available mortgages. October applications in both London and the North were from buyers with 8 per cent less income on average than in September.
The typical purchase application in London was backed up by income of £65,165 in October compared with £70,742 one month earlier. In the North typical buyers’ income dropped from £35,362 to £32,574.
London LTVs jump furthest while South West buyers lead the charge
London also recorded the biggest monthly increase in higher LTV applications, shifting the average purchase LTV up by 9.1 percentage points to 67.2 per cent. This remains the lowest across England and Wales, meaning buyers in the capital continue to put up the biggest deposits both in pure financial terms and relative to the value of their homes.
The greatest monthly increases in buyer activity occurred in the South West (+50 per cent) and the North (+47 per cent). London saw 24 per cent more mortgage applications from homebuyers in October than September.
Year-on-year the South East recorded the biggest increase in application volumes (+126 per cent) while growth of 50 per cent or more was also seen in Yorkshire and Humberside (+63 per cent), the South West (+58 per cent) and the West Midlands (+50 per cent).
Brian Murphy, head of lending at MAB, comments: “What these figures show is that the scheme’s galvanising effects are not limited to lenders who are directly participating at this stage.
“Spreading positivity about property purchases has visibly increased demand and spurred lenders across the market into bidding to win over consumers. It is an encouraging sign that we are already seeing a change in the typical profile of mortgage applicants.
“With growing speculation about the lifespan of low mortgage rates, stringent affordability tests will ensure they can afford to keep up their repayments. In such a competitive climate, seeking advice on the best product can help to weigh up the full range of options and make a choice that suits their circumstances not just now but over the lifetime of the loan.”
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