Purchases overtake remortgages for first time since 2007

It’s good news from the mortgage market this week as the latest John Charcol Monthly Mortgage Index shows that purchases now represent over half of all new mortgage applications .

According to monthly mortgage activity monitor the John Charcol Index, there has been a sharp increase in purchase activity this year. More purchases should means that the housing market is beginning to move again and may instigate a recovery in house prices.

The John Charcol Mortgage Index is published monthly, tracking three important statistics within mortgage business written by John Charcol. They are the percentage split between fixed rates, capped rates and tracker or discount rates, and between purchases and remortgages. The figures are based on mortgage applications submitted to lenders, as opposed to completions, which form the basis of figures from the Council of Mortgage Lenders (CML) and the Bank of England (BofE).

Ray Boulger of John Charcol said:

“In 2008 purchases made up an average of 25% of our business, however 2009 is a very different story. Purchases have taken an increasing share over the course of the year to date, hitting 53.4% in May. Furthermore enquiries for new business have risen sharply over the last few months, particularly for purchases, and in May the proportion of mortgage enquiries for a purchase was up to 59.7%, compared to 49.0% in April. This suggests that as these enquiries translate into actual business the proportion of purchases in our business written will continue to rise over the next few months. It seems that the market is continuing to show positive signs of recovery

Mr. Boulger added that fixed rate deals continue to be the product of choice:

“Although the take up of fixed rates is very slightly down from last month, they still account for some 79% of all mortgages arranged through John Charcol in May. This highlights that people are keen to seek refuge from the stormy economy and ensure they know exactly what they are paying each month for the foreseeable future. However, with the recent dramatic move north in fixed rates, next month’s figures will be particularly interesting.”

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