Mortgage applications up by over 20%

The number of house purchase applications bounced up 20.1% in May compared with April.

But the rebound did little more than counter the 20.9% drop in mortgage applications in April, compared with March.

According to the latest joint mortgage index compiled by Mortgage Advice Bureau and independent London brokers Coreco Group, mortgage applications last month were 20.8% higher than May 2010.

The data only relates to applications, not to approvals.

The average loan size on mortgage applications was £131,426 compared to £124,328 in April, and the average loan to value being sought was 70.4%.

Applications for remortgages rose by 25.5% in May.

Andrew Montlake, director of Coreco Group, said: “The mortgage market has recovered much of the lost ground in May following a desolate second half of April. Inquiry levels surged last month both on the purchase and remortgage side, with purchase applications up more than 50%.

“We expect to see activity levels continue to trend upwards for the rest of the year as lenders re-enter the market in earnest and engage in a price war, particularly at loan-to-value levels of 75% and below.

“An interesting tactic adopted by a couple of lenders, which shows a renewed desire to lend again, is releasing certain mortgage products for a short period of time, normally seven days, before withdrawing them.
 
“Also, remortgage rates have dropped to levels that make it worthwhile for even those home owners sat on the lowest variable rates to consider refinancing.
 
“However, there’s still a long way to go in the higher loan-to-value bracket and, whilst improving, a real and sustained recovery is still being hampered by the availability of finance at that level and a continued shortage of quality housing stock.”