The latest e.Surv Mortgage Monitor shows purchase approvals fell 6.2% in January, the lowest level since February 2009, citing a drop in demand as being to blame as the housing market stalls. Only 39,905 mortgages were approved in January, 6.2% fewer than in December, and 17.4% fewer than in January 2010.
The remortgage market also suffered a drop after suffering its first month on month fall in December since June. Volumes fell 5.2% month on month in January with only 29,000 remortgages being approved during the month, slightly below the average of the previous six months, but still well ahead of the extremely low levels a year ago, up 17.9%. With the interest rate rises looming remortgage levels could be set to pick up as home owners try to find the best fixed rate terms.
Purchase volumes fell by a similar amount across all of the price bands up to £750,000. Above this level, volumes fell somewhat faster in January. Nevertheless volumes in the most expensive price brackets seem to have held up much better than the overall market since the crunch began.
David Brown, commercial director of LSL Property Services, comments on e.surv’s latest Mortgage Monitor:
“The winter figures for lending unsurprisingly paint a fairly gloomy picture given the impact of the weather. It’s clear that many lenders are still focusing on repayments to the government rather on higher loan to value new lending to first-time buyers. But there are some brighter spots. There are signs that buy-to-let lending is beginning to loosen up, with a wider range of products recently coming onto the market demonstrating the lenders view that this market is one they want to support. We expect Demand for rental accommodation will continue to remain robust throughout 2011, and with rents still close to an all-time high, many believe buy-to-let presents a lucrative long-term investment opportunity. As depressed levels of lending continue to hamper the number of first-time buyers able to get onto the property ladder, the private rental sector will play an increasingly pivotal role in the housing market.”
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