The number of house buyers seeking a mortgage deal above 90 per cent loan to value (LTV) rose by 8 per cent in the year to March, according to the Mortgage search Tracker from Mortgage Advice Bureau.
Those looking for mortgage deals above 90 per cent now account for 27 per cent of the market, or more than one in four.
The Mortgage Search Tracker is powered by data from Mortgage 27, encompassing over 175,000 unique mortgage searches carried out each month by individual consumers via over 150 different websites, including leading consumer comparison sites and Mortgage Advice Bureau.
The data provides the earliest indication of consumer trends in the mortgage market ahead of application and lending figures, by revealing mortgage seekers’ current thinking as they explore the finances involved in buying or remortgaging.
It shows a visible shift in consumer interest and behaviour over the last year as the mortgage market has exploded into life and the availability of high LTV mortgages has improved.
In the twelve months to March 2013, fewer than one in four mortgage seekers (19 per cent) were looking for loans above 90 per cent LTV.
At the opposite end of the scale, the percentage of mortgage seekers looking for deals up to 60 per cent LTV has dropped from 33 per cent to 23 per cent over the same period of time.
Consumers seek slightly bigger loans on cheaper properties
The surge of interest in mortgages – widely attributed to Help to Buy – has also been linked to rising house prices, but the changing nature of mortgage deals attracting consumer attention tells a different story.
The average property price among mortgage seekers in Q1 2014 was down 7 per cent to £215,782 from £232,729 in Q1 2013. The average loan was down 11 per cent from £157,349 to £140,723.
The general trend over the last twelve months has been for consumers to seek slightly larger loans (averaging £142,375 vs. £139,990 in the twelve months to March 2013, a 2 per cent rise) on cheaper properties (averaging £203,244 vs. £213,462, a fall of 5 per cent).
Interest driven by prime borrowers
Since the start of the year, interest has been driven by ‘prime’ borrowers: Q1 2014 saw the lowest percentage of searches by consumers with credit problems (6 per cent) since Q2 2010, down from 8 per cent in Q1 2013.
At the same time, improving conditions have prompted lower earners to show greater interest in getting a mortgage. The average combined income of mortgage seekers has dropped by over £10,000 in the last year from £54,036 in Q1 2013 to £43,964 in Q1 2014: the lowest figure since records began almost four years ago (Q2 2010).
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“This evidence suggests that the bulk of mortgage seekers are focused on hunting down loans on moderate sized properties. Lower earners are plucking up the courage to explore their options, and a lot of borrowing interest is coming from consumers with modest ambitions of buying a home, rather than top-end investors chasing a profit from property.
“New regulations arriving this month will support efforts to ensure responsible lending. The changes are getting a lot of attention, but it is important to get the message across that the mortgage market is very much open for business to buyers who can manage their repayments.”
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