Younger home buyers have not been put off by the increased affordability checks introduced with the Mortgage Market Review (MMR), according to the April National Mortgage Index from broker Mortgage Advice Bureau.
Data gathered as part of the research found that remortgage applications were hit the hardest in the run up to MMR introduction on April 26.
But speculation about tightening criteria did not appear to dissuade younger homebuyers.
The Index showed the average age of buyers seeking a mortgage during April dipped below 37 (to 36.9) for the first time in almost four years, since September 2010.
Remortgaging limited to owners with more valuable homes
Data from over 550 brokers and 900 estate agents shows the volume of remortgage applications dropped by 12 per cent in April, while purchase applications dipped by 7 per cent. However, both purchase and remortgage volumes during April were still 29 per cent higher than in April 2013.
Remortgage business was driven by owners with more valuable homes and greater equity to draw on. The average value of remortgaged property in April was up 6 per cent from March to £299,375. The typical equity put forward jumped by 10 per cent from £124,375 to £137,178.
There was less monthly change in purchase activity: the average buyer put forward a 6 per cent larger deposit (£65,150, up from £61,325) and applied for 2 per cent extra mortgage finance (£158,535, up from £155,833) to buy a home worth 3 per cent more (£223,685, up from £217,158).
Average fixed rates continue to rise
Using data from Moneyfacts.co.uk, the Index shows that average mortgage rates continued to rise in April as lenders adjusted their pricing to temper demand while they readied themselves for MMR.
Brian Murphy, head of lending at Mortgage Advice Bureau, comments: “It’s a promising sign that confidence appears unshaken among younger borrowers. We have seen the average age of buyers seeking a mortgage slowly falling over the last twelve months, which is a symptom of greater opportunity and movement in the market.
“A degree of slow-down was inevitable in the run-up to MMR, particularly given the exceptionally busy start to 2014. With applications up 29 per cent year-on-year, the mortgage market remains open for business and in far better shape than it was a year ago.
“MMR has made getting advice an integral part of securing a mortgage, and we are already seeing the consequences with a significant shift in the focus of new products from direct to intermediary channels. With lenders targeting different consumers and taking different approaches on affordability, seeking a view on products from across the market will become the best way to find one that suits your needs.”
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