Mortgage news
Independent brokers play significant role in mortgage market
Over the last few weeks we have seen some more small positive signs in relation to the housing and mortgage markets. The Council of Mortgage Lenders (CML) - the UK trade body who represent UK mortgage lenders - has recently reported that all new mortgage lending has increased by 17% in June versus the previous month in May.
Mortgage brokers continue to play a significant role in the mortgage market. During the worst of the housing slump, particularly in the latter part of last year, many commentators were forecasting brokers would lose business as customers were more likely to go direct to the banks and buildings societies. This however hasn't been the case. In 2008, independent mortgage brokers arranged 76% of all first time buyer's mortgages, 60% of all home mover's and 66% of all re-mortgages. Whilst in the first quarter of this year the numbers have declined slightly to 70% of all first time buyer deals, 58% of all home mover's and 63% of all re-mortgages, it is evident that in the current uncertain economic environment, borrowers more than ever need and want advice from qualified mortgage brokers concerning financing their home.
Fixed rate mortgages
A big change that we have seen in recent months is a significant swing towards borrowers wanting to fix their mortgage repayments. Again, the CML for 2008 as a whole reported that approximately 58% of borrowers arranged their mortgages on a fixed rate basis with 42% opting for variable rate lending including tracker and discounted rate deals. Since January, the CML have reported a steady flight towards fixed rates and by May the proportion of people fixing their mortgages had increased to 74% - almost three quarters of all borrowers. Indeed within our own business the proportion has been even more marked, with almost 90% of borrowers choosing to fix their rates in June.
This suggests that many borrowers believe that interest rates have reached their low point and in recent weeks we have seen a gradual upward movement in the pricing of typical fixed rate deals. In June, a typical two year fixed rate based upon data from Moneyfacts (the price comparison website) was 4.66% and by mid July this had risen to 5.16%. Five year rates have also edged upward slightly further with the typical rate in June being 5.57% versus 6.15% by mid July.
Borrowers who are putting off re-mortgaging in the belief that rates will fall further should seriously consider their position and although the bank base rate is unlikely to change materially in the short term, it is likely that interest rates overall are only likely to move in one direction.
Brokers currently continue to have access to a number of exclusive deals, several of which are market leading and are not available on the high street, so prospective buyers and those looking to refinance their existing arrangements, should make an appointment with an independent mortgage broker to discuss their options.
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