Re-mortgaging, has represented 49 per cent of mortgage business in January and February this year and is expected to grow further over the next quarter according to, Intermediary Mortgage Lenders Association (IMLA).
Intermediaries now, expect to complete 2 per cent more re-mortgages, over the next two months and 72 per cent of lenders, expect that re-mortgages volumes will be higher or much higher over the next quarter.
Alternatively, home moving business has decreased, according to IMLA, falling from 23 per cent to 20 per cent over two months. Although first-time buyers business increased by 1 per cent to 11 per cent per cent brokers expect both categories to decline over the next two months; by 3 per cent for first-time buyers and 2 per cent, for home movers.
Buy to let business has held steady at 18 per cent since the last IMLA survey, according to intermediaries, but a decline of 1 per cent is expected this year. Lenders expect buy to let to remain stable, but a minority indicated it would decrease slightly. Overall the market is expected to contract further in 2008, with lenders predicting volumes will be 11 per cent lower in 2008 than in 2007, while intermediaries see a reduction of 6 per cent year on year.
Prime borrowers represented a growing proportion of the total business volumes; comprising 74 per cent of cases introduced by intermediaries to lenders, up from 73 per cent, two months ago. Self certification cases were down slightly, but sub prime was unchanged, according to IMLA. Over the next two months, brokers expect the number of prime home loans to grow slightly, and other types decline marginally. Lenders have forecasted a similar pattern, with mainstream expected to grow slightly and all types of sub-prime (particularly heavy and medium-adverse) and self certification to decline.
Peter Williams, IMLA’s executive director, said: “With home buying activity currently depressed and many fixed-rate and discounted deals up for renewal, there has been an increase in re-mortgaging business. In some cases, however, borrowers will struggle to re-mortgage and may end up paying significantly more once they switch to the lender’s standard variable rate.
He continued: “Lenders and brokers need to work together closely, not just to support new borrowers looking for a suitable mortgage, but also to help mitigate the repercussions of payment shock for existing borrowers who reach the end of their current deal.
