29 August 2010 / by Rachael Stiles
Mortgages for purchase accounted for 60 per cent of the mortgage market in July, the highest level for many years, according to mortgage broker Charcol.co.uk.
The latest mortgage index from Charcol.co.uk, shows that more than 6 in 10 mortgages in July were for purchase, as opposed to remortgage, which it believes has not happened for decades.
What’s more, initial figures for this month suggest that the proportion of purchase mortgages in August might be even higher.
Drew Wotherspoon, director of marketing at Charcol.co.uk, argues that breaking through the 60 per cent barrier is a significant step for the mortgage market, revealing a confidence in its future and putting suggestions of the UK economy returning to recession in question.
“There is much talk of a double dip and a large correction in the housing market still to come, but these figures would certainly go some way towards questioning this theory,” Mr Wotherspoon said.
“The rule book may well have been ripped up when the crunch began, but the old adage of supply and demand still holds true. Whilst we have limited new stock demand will always outstrip supply in the UK.”
He explained that while recent years have demonstrated that it is difficult to predict the economic future, further large drops in house prices in “very unlikely”.
Meanwhile, remortgage figures have remained subdued, whereas two years ago remortgages accounted for 75 per cent of the market, compared to just 40 per cent now.
Mr Wotherspoon is not surprised by this sea change, “With tightening of lender criteria and many people reverting to reasonably attractive rates” until the base rate starts to rise, but he warns against being too relaxed because “increasing numbers of borrowers would be better off” if they moved to a different deal now.
“Logic dictates that a move in bank rate will spur some people into action, but many shouldn’t wait for that,” he said and urges borrowers to seek advice.
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