Observers have noted that there is a marked increase in home mortgages. Lending to homeowners has increased, while the demand for a fixed rate on these mortgages rose also as observed. These could be over the uncertainty on interest rates as some opined.
These same observers said that 48 percent of new borrowers had fixed rates on their loans which are so far the highest observed for this year.
Data shows that home mortgages for the month of June is 19 percent more compared with May and 14 percent more compared with June of last year. Total value rose 23 percent more from May and 27 percent more from June of last year. These data showed that lending continued to grow compared to data of the previous year.
These data, however, cannot make a concrete conclusion on how the housing market is going in the short term just yet. These same observers are very cautious about their observations in the meantime.
There are also observations though that home purchases will decline in the months ahead. The government’s call for austerity measures may have a large effect on these. But in the meantime, the effects of the government’s cut on spending have not been felt yet as observed. As the data shows, the demand for home mortgages still continue to rise on a month to month basis as noted by the observers.
There are some who noted that the increasing number of home mortgage borrowers who opt for fixed rates on their borrowings may have a concern on the direction of the interest rates. During the crisis, it was noted that the popularity of fixed rate mortgages fell because borrowers took advantage of the low interest rates offered. There were also fewer prospects of rate increases because it will make the mortgage less advantageous. In the present situation, the observers are still cautious and making conclusions may not be possible.
It was noted that borrowers are looking for mortgages with fixed rates to protect them from the prospect of rising rates in the future. Although some economists are saying that the present low interest rates may not rise until next year, borrowers are looking at fixed rate mortgages for additional security.
These same observers noted also that remortgages increased somewhat in June from May of this year, although it was below the figures in June of last year. They opined that the increase in remortgage borrowings could be because of the fall in the cost of mortgages. In the second quarter of this year, remortgages rose to 2 percent in volume, although there was no increase in value compared to that of the first quarter.
It was also observed that loans to first time buyers rose from figures in April to June and also to that compared to the figures in the first quarter of this year.