Some 88% of remortgage applications were successful in the third quarter of 2017 in the UK, up 8% year on year and the highest proportion in the last two years, the latest figures reveal.
Lenders and brokers both report there was an increase in demand for five year fixed mortgages which should come as no surprise as an increase in interest rates which came earlier this month had been widely expected.
The data from the Intermediary Mortgage Lenders Association (IMLA) confirms that home owners planned to take advantage of ultra-low rates and protect themselves against future rate rises.
Overall a positive picture for the mortgage market emerges from the IMLA’s quarterly report with total mortgage applications that led to offers increasing by 13% year on year
Some 76% of brokers reported an increase in demand for five year fixed rates during the first six months of the year, with 23% stating that demand had increased substantially while 69% said demand had increased, with 16% noticing a substantial increase.
The positive outlook is reflected across all segments of the mortgage market, as buy to let, first time buyers and home mover and specialist lending segments also showed signs of strength, as the percentage of offers to completions increased across the board.
‘After a decade of record low interest rates, the timing of a possible rise was widely debated before November’s decision, both within the Bank of England and in the mortgage market, and this was clearly resonated in homes across the UK too,’ said Peter Williams, Executive Director of IMLA.
‘As a rise became more of a certainty, significant numbers of home owners have rushed to secure fixed rate mortgages priced to a 0.25% Bank rate for the next two, three, five or even 10 years,’ he pointed out.
He also explained that while customers who remain on tracker and standard variable rates are now adjusting to the first increase in monthly loan repayments in the last 10 years, unwavering borrower demand and lender supply should maintain competitive residential loan to value (LTV) mortgage pricing in what is now a rate rise environment.
‘Despite uncertainty in the wider economy, our data also shows the intermediary channel continuing its recent success in matching consumers with suitable products, helped by strong competition and appetite to lend within the boundaries of careful affordability rules,’ he added.