It believed increased income multiple lending and a confidence in their own financial security has given FTBs a new-found determination to get onto the first rung of the housing ladder.
Mortgages Direct’s monthly survey reveals that the number of FTBs has jumped dramatically, increasing by 11 per cent in December to 48 per cent, the highest level since the survey began.
Peter Gladdy, director of Mortgages Direct, commented: “The dramatic increase in FTBs in December, accompanied by a slight increase in buy-to-let mortgages, goes against all normal seasonal trends and may well reflect a renewed determination to get onto the housing ladder. The general optimism evident in the house price predictions for 2007, which range from growth of 3.5 per cent to as much as 10 per cent, has also helped these buyers take the plunge.
“FTBs have been able to take advantage of some good fixed rate deals and the high level of loans may also be a reflection of the increased generosity of lenders offering income multiples of up to five times. However, FTBs should be careful not to over-stretch their finances and make sure that they are confident about being able to afford the repayments, especially when deals end.”
Mortgages Direct’s survey also reveals that 94 per cent of borrowers are continuing to opt for fixed rate mortgages, down only 3 per cent from November, with two-year fixed deals remaining the most popular at 58 per cent. However, there was a slight increase in demand for variable rates in December with 6 per cent of borrowers opting for these mortgages.
Gladdy commented: “It is clear that borrowers remain cautious, worried about affordability constraints. However, the increase in the percentage of variable rates in December may be an indication of a slight increase in confidence as to future interest rate moves, and we could see even more borrowers returning to variable mortgages if the interest rate remains fixed in the early months of 2007.”
