Mortgage Approvals on the up in September

29 Oct 2009 Tell a Friend

An increase in house buying has resulted in a higher overall number of accepted mortgage applications, according to September lending data published by the Bank of England.    However, remortgage applications decreased for September and the previous two months, likely to be due to the fact that lenders' standard variable rate mortgages are a lot more attractive than they once were.



The fact that the actual number of mortgages being approved is climbing back to pre-credit crunch levels is encouraging.  Many people will be taking advantage of the current low interest rates and the fact that until the end of December, stamp duty is waived on properties costing less than £175,000.  Research by mortgage adviser John Charcol earlier in the week backs this up, showing that fixed rate mortgages have been overtaken in popularity by tracker and discount rate mortgages.

Where house purchasing is concerned, consumers are apparently being discouraged from the fixed rate mortgage options on the market by the comparatively high rates, and even the perks such as free valuations and waived legal fees are doing little to persuade consumers that fixed rate is preferable to tracking the Bank of England base rate.

Ray Boulger of John Charcol commented, "Nothing has happened over the last few weeks to change our view that interest rates will remain low well into 2011 and last week's weak GDP figures, showing that we are now in the longest recession since records began, supports this view.  Consequently we have continued to advise the majority of our clients to take a variable rate mortgage, as the differential between fixed and variable rate pricing still means that fixed rates are discounting a quicker and larger rise in interest rates than looks likely."

Recent figures from the Council of Mortgage lenders show that as many as 80 per cent of first time buyers receive parental help from their parents.   Lenders such as Lloyds TSB are recognising the need to court the parents of prospective home buyers. Products such as the 'Lend a Hand' mortgage give parents a more attractive proposition for helping out with the deposit, whereby they can act as a guarantor for their children whilst keeping the money within their control.  This step is wholly necessary when first time buyers often do not have large enough deposits to meet the banks' strict lending requirements.


Council of Mortgage Lenders economist Paul Samter observed:  "There is clear evidence of a significant pick up in housing market lending activity from a year ago, even though it remains low on any historic comparison.