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Mortgage News Archive

2011

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Housing market forcing the change of mortgage products

The housing market during May 2011 was quite bleak, with demand for housing declining for the first time within four months. According to Hometrack’s Monthly National Housing Survey, there was a reduction of 0.5% in the amount of new buyers registering with agents. The fall in demand within May is after 4.2% increase in March and 2.8% increase in April 2011. Hometrack suggests that the recent fall in demand is a reflection of consumers’ reduction in confidence over the last couple of months.
Even though there was an increase of 1.6% of agreed house sales in May. This was compared to the greater rises of 12.6% in March and8% in April. These increases in demand occur while the supply of homes continues to rise, growing by 3% in May.
Within May, house prices fell by 0.1%, reflecting little change compared to no change at all in April. The Director of Research at Hometrack, Richard Donnell, commented that the drop in demand in May will put downward pressure on house prices. He said: “The late Easter break and May bank holidays reduced the volume of traffic through agents’ offices, but of greater significance is the growing evidence of weakening consumer confidence.
With concern over household finances and the wider economic outlook, demand for housing is likely to continue to post further modest declines over the summer.
This will result in small single digit price falls over the coming months and is consistent with our forecast that house prices will end the year down by around 1%.”
Recent research by Mortgage Brain’s monthly product analysis suggests that the aggregate amount of mortgage products available within the market had increased by 60% in May 2011 in relation to half a year ago. Within May 2011 200 new mortgage products were introduced to the market. In this month new product launch had increased by approximately 2%.
The Mortgage Brain sourcing system also suggested that the total amount of live mortgage products increased to 11,996 at 30 May 2011. Trackers of historical mortgage products found that there has been an increase of 3,057 mortgage products, approximately 5%, in the past month.
During May, the volume of fixed- rate products also increased during May. The increase within May marked the third consecutive month in which the amount of fixed- rate mortgage products increased. The recent amount of fixed- rate products within the market stands at approximately 7,695.
However, the total amount of variable rate products reduced by 0.3% last month and currently stands at approximately 1,244.
In addition to the 60% increase in the availability of overall homeowner products relative to six months ago, mentioned earlier. There was also an increase of 184% in the amount of buy- to- let mortgages available during the last six months.
The Chief Executive of Mortgage Brain, Mark Lofthouse, said: "Reaching a three year high in terms of overall product availability is a significant milestone and shows, once again that the UK mortgage market is continuing to move in the right direction for the benefit of intermediaries and borrowers. With strong rises - particularly over the past six months - being seen across the board, it seems that most sectors are being catered for by product providers, which gives intermediaries more opportunities to source and advise on a greater variety of products."

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