The UK mortgage market saw its strongest start to a year since 2008, according to the latest Housing Market Activity Report by Connells Survey and Valuation published today.
The total number of residential valuations conducted during the first quarter of 2012 was 10% higher than in the previous quarter, a rise of 34% compared to the same period last year, it said.
Although the number of valuations for first time buyers was 35% higher in the first three months of the year compared to the first quarter of 2011, the end of the stamp duty holiday towards the end of March began to take its toll on mortgage demand for this group in the final month of the quarter.
Indeed, first time buyers showed the smallest annual growth in March of 15% when compared to other home buyers and represented just 29% of all valuations completed in the month, down from 35% in February.
Valuation activity from owner occupiers moving home in the firs three months of 2012 increased by 25% compared to the same quarter in 2011, with activity in March up 26% compared to a year ago.
'The rush to complete before the end of the stamp duty holiday provided a leg up to the valuations market in the first quarter of the year, but first timers were by no means the only group to benefit. The increasing number of first-timers freed up property chains, allowing existing home movers to move up the ladder. We've also seen a strong demand from buyers looking to move early, ahead of the disruption of the Olympics and the Jubilee in the summer, which has supported activity in March,' said John Bagshaw, corporate services director of Connells Survey and Valuation.
'However, there are financial clouds on the horizon, with the increased wholesale funding costs for lenders likely to affect the recently improving credit conditions. The next few months will prove to be the real barometer for the housing market, as it copes with both the end of the stamp duty holiday and the introduction of the 7% tax rate for £2 million properties announced in the budget. A strong level of high LTV lending, whether or not through the government's NewBuy scheme, will be key to preventing the housing market's recovery from going into reverse,' he explained.
While the remortgage market grew strongly year on year, with 37% more remortgage valuations in the first quarter of 2012 than in the same period of 2011, the increase slowed on a quarterly basis, with an increase of just 5% in the last three months, compared to the last quarter of 2011.
'The receding prospect of an increase to the Bank rate pushed remortgaging far down the agenda for many borrowers at the start of the quarter but we've seen demand bounce back strongly in the last month, with 44% more valuations in March than in February,' said Bagshaw.
'The recent increases to SVRs from several lenders, not to mention the changes to interest only criteria, have encouraged borrowers to lock into new products, with many choosing the security of a fixed rate,' he added.
The report also shows that the buy to let market continued its rapid expansion in the first quarter of the year, as valuations activity for property investors increased by 11%. This represented an annual increase of 56% compared to the first quarter of 2011.
'Rent rises may have begun to slow in the year's outset, but this is down to an increasing number of investors entering the market, not a long term decline in tenant demand. Buy to let mortgage rates remain attractively low, and combined with near record rents, they provide a compelling argument to would be investors,' pointed out Bagshaw.
SOURCE Propertywire
