Mortgage Confidence - High for Christmas and New Year as Buy to Let Market Matures
Confidence among specialist financial advisers and mortgage brokers almost hit an all time high at Christmas. This is revealed by the Paragon Mortgages Financial Advisor Confidence Tracking (FACT) Index today.
The Index reached 135.3, only marginally lower than the eight year high of 135.5 reached in the second quarter of 2002.
Buy to Let mortgages rose from 9.2% to 10.5%. The greatest proportion of these, 41%, were arranged to extend the portfolios of experienced Buy to Let investors. The number of mortgages arranged for landlords entering the market for the first time fell dramatically from 39% to 32%.
Commented John Heron, Managing Director of Paragon Mortgages, "The fact that more experienced landlords are stepping up investment in rental property while fewer novice landlords are entering the market demonstrates the maturity of the Buy to Let market. We also know from other Paragon surveys that professional landlords are buying more modestly priced properties so as to maximise rental returns."
Overall, the number of mortgages arranged by financial advisers during the fourth quarter of 2002 was up 4% on the previous quarter. That is 15% more than the number arranged a year ago and 31% more than it was two years ago.
Nearly half of all mortgages arranged by financial advisers were remortgages. This rose from 44% to 47% over the quarter to reach the highest level for remortgaging for two years.
The proportion of remortgages to control outgoings continued to climb significantly, rising from 38% to 42%. The proportion of remortgages arranged for short term gain has been declining since 1998 and the latest quarterly figures confirm that this is a continuing trend.
Said John Heron, "These figures continue to show that the majority of borrowers are conservative and cautious. On the whole, borrowers are not remortgaging to finance excessive spending."
The type of interest rate favoured showed signs of variation. Fixed rates saw an increase in popularity, rising quite sharply for a single quarter from 22% to 25% of the mortgages arranged. Discount rates showed a decline in popularity, falling from 39% to 37% and Base Rate Tracker mortgages saw a slight decline, down 1% to 29%.
Unsurprisingly, the popularity of endowment mortgages has nearly fallen off the page, declining from 2.9% to 1.9% of all mortgages arranged. This is in contrast to less than ten years ago, when endowment mortgages would account for well over half the total mortgage market.
According to the FACT Index, financial advisers start the New Year with expectations of a 2.8% rise in mortgage business during the first quarter.
The Paragon Mortgages FACT Index is researched quarterly. It takes as its base the mortgages in the inaugural survey, adjusts the Index by the current average and further adjusts it by the average forecast of mortgage levels for the next three months. Further details are available at www.paragon-mortgages.co.uk or on 0800 440099.