Optimism For New Business Among Mortgage Providers Sees Significant Decline
Written by TNS
23 May 2005
Just over half (54 per cent) of mortgage intermediaries in Britain
believe that they will be selling more mortgages in the next 12 months
compared with more than over three quarters (77 per cent) a year
previously, according to the findings of a survey published today by a
leading global provider of market information, TNS.
The findings also reveal that intermediaries feel that the popularity
offixed-rate mortgages is likely to decline over the coming three
months, while the popularity of base rate tracker mortgages will
increase significantly over the same period.
The TNS research shows a decline in the proportion of customers
purchasing a second property as a buy-to-let investment –just 12 per
cent of intermediaries said they were nowarranging this type of
mortgage compared with 18 per cent six months previously, reflecting
growing uncertainty about future interest rate rises and the fact that
rental values have not increased in line with house prices and mortgage
A downturn in the number of first-time buyers in the mortgage
marketplace is also highlighted by the findings.? Over the two
years between the first quarter of 2003 and the final quarter of 2004,
the proportion of mortgages arranged for first-time buyers declined
from more than a quarter (27 per cent) to just one in five (20 per
cent) of all mortgages arranged.
However, over the same two-year period, there has been a
notableincrease in the proportion of remortgages arranged by
intermediaries from 36 per cent of the total mortgage market in the
first quarter of 2003 to 43 per cent by the final quarter of
2004.? Of these, around six out of ten are customers who have
remortgaged to release equity from their properties.
Sharon Rees, Director, TNS said: “Optimism among intermediaries for
selling more mortgages during the coming 12 months is at its lowest for
some years and this is unlikely to change significantly unless there is
a dramatic drop in interest rates or the bottom falls out of the
residential property market. In addition, regulation which was
introduced in October 2004and which has placed an additional
administrative burden upon intermediaries, has resulted in mortgages
taking longer to process than previously.
“First-time buyers are clearly becoming less able to afford a mortgage,
while existing mortgage customers who are looking to move up the
property ladder are turning to more creative or niche mortgage
solutions to help them support the additional debt they need to take
“As a result, first-time buyers are looking for mortgages based on
higher income multipliers than ever before, as well as seeking to
negotiate more flexible mortgages which allow them to vary repayments
depending on circumstances, or to build in repayment holidays. In
contrast, equity release mortgages have appeared on the market, aimed
predominantly at older age group customers who see them as an
alternative to investing in a pension scheme.?
“The onus is nowon mortgage providers to continue to develop mortgage
packages tailored to the specific needs of customers in order to
sustain the mortgage market and encourage newbuyers.”
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