The Financial Services Authority (FSA) this week released its product services data (PSD) report for regulated mortgage contracts, for the period between April 2009 and March 2010.
There was a substantial decline in mortgage sales from 2008/09 when there were 1.2m sales with value of £171bn to 0.93m mortgage sales with a total value of £123 billion in 2009/10.
This year 38% of all transactions were remortgages, a big decline on the 2008/09 figure of 60%; 36% were home movers (2008/09 — 23%); and 22% were first-time buyers (2008/09 — 13%).
In the current year 64% of all sales are fixed-rate mortgages (2008/09 — 59%) with 78% of first-time buyers opting for a fixed-rate mortgage (2008/09 — 74%). This reflects the current low interest rates and shows that buyers may be wary of an increase in rates towards the end of 2010 or 2011. Also reflecting the low interest rates, 72% of customers chose capital and interest as their mortgage repayment method (2008/09 — 63%). The overall proportion of interest-only mortgages reduced by 8.7 per cent to 28 per cent. The report reveals that 19 per cent of mortgages sold were interest-only loans where the borrower did not have a designated repayment method or where the lender was not aware of one, compared to 15 per cent of mortgages the previous year. The FSA has previously stated it would look for ways to tighten their controls around interest-only mortgages. The regulator says it plans to consult on this later in the year.
74% of mortgage lending was to borrowers requiring loan-to-value ratios of less than 75% (2008/09 — 69%). For first-time buyers the figure is 48%, up from 36% in 2008/9. In June this year, FSA manager Katharine Leaman reported that the Financial Services Authority needed a new intensive regime to examine individual advisers’ sales to stamp out “market abuse”. The proposed new regime would put banks, stockbrokers and IFA firms under the spotlight with every transaction being linked back to an adviser. The new proposal for individual supervision of advisers was part of the FSA professionalism drive, said Leaman. ‘It is about making the individual advisers accountable for what they are doing and you would expect that if you were creating a new profession,’ said the manager of the FSA professional standards policy team.
Whilst remortgaging had not suffered as much in the early stages of the recession the very low levels of interest rates have clearly hit the large remortgage firms heavily whilst smaller firms with a higher level of transctional cases will have done comparitively better.