Sharp increase in remortgage business at Paragon

Posted on Thursday, May 12 by Joy Tibbs

Research from Paragon Mortgages shows that 77% of residential mortgages introduced during the first quarter of 2011 were capital repayment mortgages. This is the highest proportion since Paragon launched its ‘Financial Adviser Confidence Tracking (FACT) Index in 1996.

The proportion of repayment mortgages was up from 71% recorded during the final quarter of 2010 and has been rising since the third quarter of 2007, when it hit a six-year low of 57%.

Conversely, interest-only mortgages continued their downward trend. Just 14% of mortgages introduced during the quarter were interest-only, the lowest proportion since the first quarter of 2004 and down from a high of 28% recorded during the third quarter of 2007.

FACT also showed there was a sharp increase in the proportion of residential mortgage borrowers remortgaging during the first quarter of the year, which may have been prompted by speculation of an imminent interest rate rise.

Nearly half (45%) of residential mortgage applications submitted via intermediaries during the period were for remortgage purposes, up from 38% in the fourth quarter of 2010 and the highest figure since the second quarter of 2009.

Conversely, the proportion of house movers is down from 31% to 26%, while first-time buyers increased from 15% to 18%.

John Heron, Paragon Mortgages managing director, says: “A number of positives emerged during the quarter - there was a solid improvement in the number of mortgages introduced during the period and it is encouraging that intermediaries believe business levels will rise further during the second quarter.

“Meanwhile, it is clear that residential borrowers are starting to position themselves for an increase in interest rates and are taking precautionary action.”

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