Introducer Today: Fix now warning, as bottom of market is called
Thu 04 Jul 2013
The bottom of the mortgage market has been called, after Bank of England figures yesterday showed a major uplift in demand for house purchase loans, with the Bank forecasting a "significant" further rise. The Bank also reported that remortgaging demand rose "significantly" during the second quarter of this year. David Copland, director of mortgage services at LSL, said the BoE Credit Conditions Survey indicated that the time has come for borrowers to fix.
However, borrowers may need to act quickly, because of the way some lenders are reacting to rising Swap rates. Paragon has pulled its entire range of fixed-rate products citing volatility in Swaps, while Skipton, Newcastle andCoventry Building Societies have hiked rates on some fixed-rate products, and on Tuesday, Platform the Co-op's intermediary arm increased rates across its entire fixed range. Copland said yesterday: "While it is very hard to call the bottom of the market, it is starting to look like we have now reached or passed that point. "What that means for borrowers is that it may well be time for all those sitting on standard variable rates to remortgage to some of the very low fixed rates out there. "While rates dropped in the last three months and may even drop further in the short term, it won't take much more stimulus before SVRs start rising to levels above what even the five-year fixed rates are at the moment, and those people just making ends meet on their SVR may suddenly be caught short with higher interest rates again."
The LSL Group includes estate agency chains Reeds Rains and Your Move, as well as London agents Marsh & Parsons, plus a number of mortgage businesses employing 600 advisers between them. The Bank of England's report said that while demand for mortgages and remortgages has gone up, demand for unsecured lending has fallen, reflecting a fall in demand for credit card lending. The report expects availability of secured credit to continue to expand, with more mortgage lenders willing to lend at 90% LTV and above.
The report says that some "lenders noted that the Government's Help to Buy scheme should facilitate more lending at high LTV rates in the future". Demand for house purchase in the second quarter of this year was the highest since the third quarter of 2009, says the report, with "significant" increases in demand for both prime lending and buy-to-let.