November mortgage activity boosted by first time buyer demand

A Connells Survey and Valuation ‘Housing Market Activity Report’ shows a monthly increase in mortgage activity in November, thanks to first time buyer demand.
Valuations carried out during November increased by 3 per cent, when compared to October.
Increased first time buyer activity was a “key factor” in increased mortgage activity for November, with the number of valuations conducted on behalf of first time buyers increasing by 7 per cent compared to the previous month.  These figures represent 29 per cent of total valuations carried out by Connells, the highest ratio since August.  This increase follows a decline to 27 per cent of all valuations for October.
Corporate Services Director of Connells Survey and Valuation, John Bagshaw, said:
“In November, first-time buyers exploited a short window of opportunity as rates for higher LTV mortgages improved briefly. With house prices steadily declining, affordability has improved for new buyers, many of those able to secure mortgages have been acting quickly to complete before Christmas.
Following the Chancellor’s decision not to extend to stamp duty holiday for first-time buyers, activity will be elevated in the short-term as buyers look to move before March. But in the long-term, the recovery of transactions will be led by lenders’ ability to unlock the lower tier of the market. The new mortgage indemnity scheme is a step in the right direction but the threat of the Eurozone crisis — combined with the abolition of the stamp duty holiday — may undermine its impact in the coming year.” 
Remortgage activity also boosted valuation figures in November with 12 per cent more remortgage valuations than the previous month, an annual increase of 92 per cent.
John Bagshaw continued:
“Lenders are showing signs of increasing product prices as Libor rates climb. Despite the record low interest rates, as banks find it harder to secure funding, mortgage rates are rising. As a result, current borrowers are increasingly looking to lock-in to cheaper, longer-term products to hedge against unexpected increases in their monthly mortgage costs.”
Despite the boost from first time buyers and remortgage valuations, the number of home mover valuations fell by 8 per cent in November.  However, there were still 60 per cent more than the same period in 2010.
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