Price still continues to drive the market…
"The high proportion of lending on variable rates, over three-quarters of all mortgages arranged in February, clearly demonstrates that price is still the key driver in borrower behaviour. When the gap between fixed and variable rates is narrow, most borrowers will tend to opt for the security that a fixed rate provides. However, when the gap increases and fixed rates become more expensive – as they have been for some months now – variables become the product of choice.
"The good news, however, for borrowers is that Swap rates, the rates that determine fixed rate pricing, have come down since the start of the month, so we may well see the addition of some more competitively priced fixed products over the coming weeks. That said, the products are still likely to lag behind their variable counterparts so we would not expect to see the preference for variable products decline that significantly."
Get back to where you once belonged…
"Some encouraging news is that the proportion of first time buyers entering the market has moved up slightly this month, reversing a trend that has had many worried. Whether this is a blip or the start of an upward trend remains to be seen. The fact is that first time buyers have still fallen, in terms of the total amount of lending to them, by 14% in 2 years, from 43% to just 29%.
"It would not surprise us if this was merely a blip and first time buyer numbers continue to remain low this year. With this in mind, it was disappointing that the Chancellor did not take the chance to help this beleaguered group of borrowers in his budget this week. Stamp duty, a tax never meant to affect this group, now costs the average first time buyer over £900, and can often mean the difference between buying a home or not."
