QCAS, the conveyancing arm of Leeds corporate law firm Shulmans, has observed an unusually high number of mortgage deals in the first two weeks of August, which typically is a slow month for the sector business.
The number of mortgage deals for the first two weeks alone have already exceeded the figures recorded for the entire month of August over the past five years, QCAS said.
The conveyancing firm says the extraordinary high activity is due to a combination of factors. Borrowers are looking to get cheaper deals while they are available, as talks of imminent interest rate rises have stirred up the market. Lower loan-to-value (LTV) ratios have also fuelled demand.
Victoria Mortimer, head of QCAS, comments:
“Normally transactions are low in August due to holidays, but we’ve got more work on than ever compared with the same time in previous years. As a national, large scale conveyancer we are well-placed to spot emerging trends and there’s no doubt about this one. People are getting their finances sorted before the end of the year.
“In fact the past 12 months has been incredible, as we’ve handled over £3 billion worth of property transactions. We believe this is due to a combination of factors; there are some great deals out there at the moment, the loan-to-value (LTV) ratio constraints have been relaxed, and Bank of England Governor Mark Carney saying that a decision around a rate rise would come into sharper relief around the turn of the year.
Because of Mark Carney’s warning, Mortimer believes that lenders will start to pull their lower interest rate products soon and also reduce the period over which rates can be fixed, hence the spike in new mortgage and re-mortgage transactions. However, on a more positive note, LTV constraints have lessened, with many lenders now being satisfied with 90 per cent loan-to-value ratios (meaning a ten per cent deposit required from the buyer) rather than the 70 per cent (a thirty per cent deposit) many had demanded in recent years, and Victoria anticipates that this ratio will remain for those with good credit scores.
“Lenders’ purse strings have loosened, certainly,” she said, “but everything remains within FCA regulations, so I cannot see a return to the sub-prime situation of past years. Having said that, I do see significantly increased confidence in mortgage lending. More people are taking new mortgages out, and many more are re-mortgaging. This is the busiest summer for lending in a very long time.”
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