From its own data, Hamptons Mortgages has seen the proportion of longer term variable rate lending rise 13.11% in the last month alone (10.67% September 2007 – 23.78% October 2007) and increase by 16.16% in the last six months (7.62% April 2007 – 23.78% October 2007). The proportion of longer term fixed lending also increased by 4.55% since September 2007 (5.91% September 2007 – 10.46% October 2007).
In stark contrast, the proportion of both two-year fixed and two-year variable lending decreased in the last month by 5.77% and 11.89% respectively (27.81% September 2007 – 22.04% October 2007; 55.61% September 2007 – 43.72% October 2007). Borrowers are opting for longer term mortgages to avoid short-term financial instability.
Purchase and Buy-to-let:
Hamptons Mortgages saw the proportion of loans taken for home purchase in October, drop over 10% since September (30.29% September 2007 – 19.70% October 2007) and over 26% year on year (46.08% October 2006 – 19.70% October 2007).
This is clearly an area still reeling from credit crisis reverberations and these decreases tie in with recent reports of falling house prices from the Halifax which reported in October that monthly change was down 0.5%.
On the other hand, Hamptons Mortgages data also shows that buy-to-let purchase has seen an increase of 25.55% in the last month (18.29% September 2007 – 43.84% October 2007), indicating that buy-to-let still remains resilient and is one growth area that may continue to ride out the credit crunch storm.
Jonathan Cornell, managing director of Hamptons Mortgages, said: “It would appear that borrowers are choosing to opt for longer term mortgages as they, like everyone else, are none the wiser as to what will happen with interest rates and are tired of second guessing. Last week, predictions of interest rate direction in the New Year were rife, with some suggesting they will return to a low of 4.75%. It strikes me as unlikely that they will go as low as this but I think it is a strong possibility there will be a rate cut in the first few months of 2008. Should this happen, those moving to variable rate mortgages now will be laughing.”
