This good news comes from the latest National Mortgage Index compiled by Mortgage Advice Bureau and Coreco Group.
The majority of new borrowers are overwhelmingly choosing fixed mortgages, with 80% of all mortgage applications in March for fixed rate deals, compared to 79% in February. This is a reflection of the sentiment amongst borrowers, who are making their decisions on the long-term game, with interest rates expected to rise this year, over the shorter-term gains of choosing variable and tracker mortgages while interest rates remain at 0.5%, according to the Index.
The average loan size on mortgage applications in March was £127,546 compared to £123,508 in February, an increase of 3.3%. While the average LTV on mortgage applications dropped to 69.9% in March from 71.4% in February. The average deposit put down by a mortgage applicant in March was £54,923.
The average age of a mortgage applicant in the UK in March was 37 years 7 months.
Remortgages
Following a surge in remortgage applications in February, the Index showed that demand abated slightly in March with remortgage applications falling 1.9% in March compared to February, although application numbers were still 31.9% higher than March 2010.
Again, the majority of homeowners (73%) remortgaging in March chose fixed rate over variable rate products. The average loan size of remortgage applications in March was down 7.1% on the previous month, falling from £142,466 to £132,341.
Regional picture
Across the regions, mortgage applications in the South West were up 30% in March compared to February but down 6.3% in the North West for the same period. The average loan size (excluding London) on mortgage applications was highest in the South East at £155,895 and lowest in the North at £96,438.
In terms of product type, 92% of applicants in Yorkshire & Humber chose fixed rate mortgage deals in March, compared to 71% of applicants in the East Midlands and 74% in East Anglia. Average LTVs were highest in the North West (77.4%) and lowest in the South West (64.7%).
The oldest mortgage applicants in March were in the South West, averaging 41 years 4 months, while the youngest were in Wales, averaging 34 years 2 months, a difference of almost eight years in age of applicants between the respective areas.
For remortgages, 91% of applications in the North chose fixed rate deals during March, compared to only 53% in Wales. The average loan size was highest in Wales (62.5%) and lowest in East Anglia (43.9%).
Commenting, Brian Murphy, head of lending, Mortgage Advice Bureau, said: “March figures are encouraging and continue the positive start to the year with another month on month increase in borrower activity. This reinforces the belief that a more stable market is slowly returning.
“The pick-up in the number of home buyers is indicative of the traditional spring market bounce, and with the recent spell of unusually warm weather it appears prospective buyers have been out in their droves hoping to take advantage of some great value properties on the market and mortgage interest rates at or near all time lows.
“Although remortgages are still significantly up on twelve months ago, with transaction levels in March at their highest level in any one month since April 2008, numbers do appear to have reached a plateau. We may well see remortgage transactions dropping off further in April with inflationary pressures easing, making it less likely that we will see a rate rise before the summer.
“Mortgage product availability continues to improve and there is evidence that competition between lenders is starting to pick up. This view is supported by several lenders increasing their risk appetite, albeit cautiously by offering (through specific distributors) slightly higher loan to value lending with the introduction of products at 90% and 95% LTV. However, it should be emphasised that the underwriting requirements are extremely rigorous and funds for these products are limited.
“Following a slight rise in the cost of the average two and five year fixed rates during March, pricing has fallen back marginally this month, although conversely average two year tracker rates have ticked back up a little. Importantly, average rates for two year trackers and two and five year fixed rates are below the corresponding average rates that were being offered 12 months ago, further demonstrating that mortgage product pricing continues to offer good value relative to historic levels.”
