Mortgage applications hit record high in October

According to data released from Mortgage Advice Bureau, applications from homebuyers and remortgaging homeowners reached their highest point of the year during October. 

Total applications via brokers were up 13% in October compared with September to record double-digit growth for the second successive month, having also risen 13% from August to September. 

October’s monthly total was up 21% year-on-year and 3% higher than in March – the previous peak of 2014 and the final month before the Mortgage Market Review (MMR) took effect.

The data indicates consumer appetite for mortgage finance remains strong despite reports of cooling house prices and tighter affordability checks. Applications for Jan-Oct 2014 were up 32% on the equivalent period of 2013 and have now exceeded the 2013 year total by 11% after passing this milestone in October.

Remortgage applications during October were up 17% in the month and 34% year-on-year, while homebuyer applications were up 11% in the month and 17% year-on-year. 

While the slowing rate of annual house price growth may be reassuring aspiring buyers that they can still afford to move, the equity gains made by homeowners are an important factor in the remortgage revival. 

Broker product range exceeds the entire market of 2012
Rising applications via brokers also indicate their growing role under MMR, with CML data showing a growing share of customers turning to intermediaries to find a loan rather than going direct to lenders.

October’s National Mortgage Index also reveals that intermediary product numbers grew by 270 in October compared with September to reach 8,812, while direct-only products rose 136 to 3,663. 

In the six months since MMR took effect in April, broker products have risen 11% (870) compared to a 5% (189) growth in direct-only products.

October’s total of 8,812 broker products has only been bettered once (November 2013) in the five years since November 2008. It meant more products were available via brokers last month than across the whole market at any point in 2012.

New product launches in October pushed the overall total to 12,476, exceeding the previous post-recession high of 12,265 (August 2014) by an extra 2%.

Brian Murphy, head of lending at Mortgage Advice Bureau, had this to say:

“The direction of house prices, interest rates and wages are giving consumers plenty to think about, and these figures show that growing numbers of borrowers are focused on progressing their house buying or remortgaging plans and seeking independent advice to make it happen. 

After seeing the Bank of England flirt with a first interest rate rise in 7½ years, more people will be conscious that change is coming and looking for opportunities to make the most of today’s low prices. With product numbers continuing to rise, they have more choices at their disposal than at any point since the market recovery began.

House price rises have also improved the outlook for many homeowners experiencing low or negative equity – giving them a better chance of moving home or finding a new deal on their existing property.”

Twelve-month low for average purchase LTVs

The Index suggests that MMR affordability tests have had some impact on borrower profiles: October’s average loan to value (LTV) for homebuyers was 69.7%, dropping for a third successive month to the lowest figure for a year – since October 2013 (69.1%) – having reached 71.8% in March. 

It means borrowers are putting up more funding as a percentage of their house purchases, and the average purchase mortgage has also dropped by 4% – over £7,000 – since it peaked at £165,463 in June.