Mortgage market picked up in September

The total number of valuations conducted during September rose by more than a third (+37%), compared to August.

During the third quarter as a whole, which included the traditional summer lull period, there were 11% more valuations than in Q2 2011.

The annual growth was even more pronounced, with 63% more valuations in September than last year, when gross mortgage lending was at its lowest September level since 2000.

John Bagshaw, corporate services director of Connells Survey and Valuation, said: “The mortgage market has gradually improved in recent months, in spite of the difficult economic backdrop, and this has fed through into an increasing demand for surveys and valuations.

“While this bounceback has been exaggerated by the end of the traditional summer lull, it is a strong improvement compared to last year. Gross lending has improved, alongside the variety of cheaper products on the market – and buyers and remortgagors have taken advantage.

“Given the context of low interest rates, we expect a robust performance in the valuations market for the remainder of the year – especially in areas of continuing growth such as buy-to-let.”

The growing number of buy-to-let investors looking to buy properties played a crucial role in the increased activity. During the month, there were 54% more valuations conducted for prospective property investors than in August, an increase of 79% compared to September 2010.

John Bagshaw said: “While several of the cheapest buy-to-let mortgage rates have been taken off the shelf in recent weeks, landlords’ demand for mortgage finance has been undiminished.

“Rents are climbing ever upwards, and with house prices steady, yields are looking increasingly attractive for prospective investors.”

As a proportion of overall valuation activity, remortgaging activity rose to its highest level since December 2008, representing one quarter of all Connells Survey and Valuations’ activity.

An increasing number of borrowers are looking to exploit the greatest choice in products in over three years, with borrowers able to pick from more than 3,000 products. As a result, remortgage activity has increased by 44% in the past month.

John Bagshaw commented: “Whilst interest rate rises are not on the cards in the foreseeable future, and although standard variable rates will remain low in the medium-term, many borrowers are still looking to remortgage.

“Burgeoning competition in the market has driven the average fixed-term rate down to nearly 4%, and many borrowers are locking in on a rate that they will find extremely affordable for years to come.”

Purchase activity from owner-occupiers and first-time buyers also showed signs of improvement. The number of valuations for home movers in September was up by 58% on the previous year, a monthly increase of 36%.

The number of first-time buyers on the move also picked up compared to last year, with an increase of 28% compared to September 2010 and 27% compared to August 2011.

John Bagshaw concluded: “The mortgage market is in a better state than last year, and this is reflected in increasing valuation activity. The rock bottom rates available at present has stimulated increasing activity amongst those who have sufficient deposits, or homeowners with substantial equity who are considering upsizing.

“However, for a concerted recovery in the housing market to take hold, we need to see these attractive deals reaching a greater portion of would-be buyers.”