4August has traditionally been a quiet month when business volumes drop off because of the holiday season, but this has been exacerbated this year by the situation in the market.
There was a noticeable drop off in lead prices due to a much lower level of adviser activity. And the number of borrowers looking for advice went down, but not much more than is seasonally expected. In fact, in comparison to August last year the number of borrowers looking for advice was up 26%.
In addition, consumer expectations of how much they can borrow have not dropped as much as might be expected. In contrast to the reported 10% annual drop in house prices, borrower expectation of how large a mortgage they wanted only dropped by 1.5% during the past month, and has only dropped 4.8% since the high point in March when the average mortgage requested was £138,000.
The current average of £131,500 is actually 2.7% higher than this time last year.
Around the country, three regions saw an increase in the amount people wanted to borrow: Anglia and the South West saw slight rises after a fall last month, meaning that borrowing amounts are mostly stable here. Wales saw a real increase of 2.5% after loan amounts there have been stable for the last two months.
The most remarkable region was Northern Ireland which saw a 13% increase in the amount people wanted to borrow, taking the average loan size there to £133,000, the highest it has been since April. The largest fall in borrowing amounts was in London, where the average that people wanted to borrow dropped by 7% from £205,000 down to £191,500.
This more than negated the previous month’s 5% rise. This downward trend has affected the South of England more significantly than the rest of the UK: South Central England saw the second highest drop of 6%, taking average requested loan amounts from £166,500 down to £155,700. The South East got away with a relatively modest 1.5% drop, leaving the average borrowing amount there higher than in South Central for the first time since May.
This fanned out across the country, so the Midlands also saw a 2.3% drop in the amount that people wanted to borrow, but it stabilised in the Northern regions with both North East and North West borrowers wanting the same amounts as last month, and Scottish borrowers wanting just 1% less than in July
In all, it is a mixed picture, with the seasonal dip in the number of consumers, and the dip in the number of advisers, having a marked effect on the average lead price which is 9% less than last month. n
Grant Stevens is managing director of Leadbay
