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Mortgage approvals increased in UK in May but still below six month average
The number of mortgages approved for buyers in the UK increased in May compared to the previous month but are still below the high level recorded in March due to stamp duty changes. The data from the Bank of England’s Money and Credit Report shows that there were 70,553 approvals for house purchases in March, 66,205 in April and 67,042 in May. This compares to an average of 70,598 over the previous six months. The data also shows that the number of approvals for remortgaging was 42,919, compared to the average of 41,019 over the previous six months. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), stamp duty changes for buy to let properties and second homes meant there was an air of inevitability about the April dip in mortgage approvals, which has now been followed up by a modest recovery in the lead-up to the UK’s referendum on its European Union membership. ‘House purchase activity hasn’t quite returned to the heightened levels of early 2016, but the homebuyer market has visibly strengthened over the last 18 months. The data also shows record remortgage activity with almost 43,000 approvals in May, the highest of the post-Mortgage Market Review (MMR) era,’ he said. ‘A resurgence in remortgaging has been underway for the last six months, with more than 40,000 loans approved every month since December. It reflects growing opportunity for consumers to use the equity in their homes to switch to a new deal, and growing awareness of the savings on offer while rates are low and lender competition is high,’ he pointed out. Williams also explained that a year ago, the UK mortgage market was about to experience a post-election bounce and it seems unlikely that last week’s EU referendum result will produce a similar effect this time round. ‘However, despite inevitable uncertainty as some buyers and sellers wait to see how the dust settles, lenders will be maintaining business as usual. Mortgage rates continue to look attractive and the housing supply shortage means homes appearing on the market are still likely to be subject to considerable demand,’ he added. David Whittaker, managing director of Mortgages for Business, explained that investors’ desire to complete before the 01 April deadline meant that business was brought forward into February and March, which then resulted in dampened approval figures for April. ‘However, following this, it is now clear that the number of purchase approvals did increase between April and May, as property investors came to terms with the new normal this tax year,’ he said. ‘May feels like an age ago. Now, there is little doubt that the rest of the year will be dominated by the events of the last seven days. Following the Brexit vote, anecdotal evidence suggests that many are holding off on transactions until a more detailed picture of the economic and political fallout emerges. This could make for a quieter third quarter,’… Continue reading
First time buyers paid more for a home in England and Wales in May
First time buyers in England and Wales paid an average of £173,282 to get on the housing ladder in May, a record high that fuelled by intense competition for properties. This was despite some uncertainty creeping into the housing market ahead of the referendum on the future of the UK in the European Union, according to the latest first time buyer tracker index from real estate agents Your Move and Reeds Rains. But transactions in the first time buyer sector were down by 0.8% compared to the previous month at 24,900 completed sales in May compared to 25,100 in April. However, the report points out that without a pre-referendum supply shortfall first time buyer numbers would have been even higher. The amount paid by first time buyers was up 2.7% from £168,656 in April and 15.8% more than the average of £149,645 seen in May 2015. First time buyer house prices have now increased by more than £23,000 in the last 12 months and current average prices paid are the highest on record. Across the market as a whole, house prices dipped in May in anticipation of the EU referendum on 23 June, with the latest Your Move House Price Index showing house prices in England and Wales fell 0.4% month on month in May. But the bottom of the market has defied this trend fuelled by unwavering first time buyer demand. The overarching trend remains strong, with first time buyer numbers some 13.2% higher than the 22,000 seen in February and 5.1% higher than a year ago. The tracker report also shows that the average mortgage rate for first time buyers slipped further in May to 3.08%, a new record low, following a fall of 0.37 percentage points over the past year. And while there is a climbing cost of purchasing a home, these cheaper rates mean mortgage repayments have not increased significantly as a proportion of first time buyer’s income. As of May, mortgage repayments accounted for 21.1% of income, just 1.7% more than a year ago. Meanwhile, the average first time buyer deposit currently sits at £27,669, up 12.8% or £3,146 from £24,523 a year ago. When compared to the average first time buyer income of £39,651, this represents an extra 29 days’ worth of salary. As a proportion of income, the average deposit has climbed 6.1% compared to May 2015. Continue reading
Asking prices up in England and Wales but down in London
Asking prices in England and Wales have reached a record high despite the looming vote on the future of the UK in the European Union, the latest index report shows. Housing market momentum continues to push up the price of property coming on to the market up with a rise of 0.8% or £2,320 to new high of £310,471, according to the June report from property portal Rightmove. Desire to buy and lack of supply is affecting the market with the time to sell falling to 57 days, the fastest ever measured by Rightmove. But there is some signs of referendum associated uncertainty with fewer new sellers coming to market as new properties for sale were down 5.3% compared to average at this time of year with the most reluctant being owners of larger homes with four or more bedrooms who have dropped by 6.6%. A breakdown of the figures show that in the North East asking prices increased by 0.1% month on month and 3.1% year on year to an average of £148,662 while in the North West they were up 2.2% month on month and 4.2% year on year to £183,482. In the West Midlands there was a month on month rise of 1.4% and year on year asking prices were up 4% to an average of £209,273 and in the East Midlands up 0.6% and 4.8% respectively to £198,090. There was a month on month rise of 0.6% in Yorkshire and Humber and year on year asking prices are up 2.6% to an average of £178,388 while in the East of England they were up 1.2% and are now 9.4% above a year ago at £338,499. In the South West there was a 1.4% month on month rise and year on year an increase of 5% to an average of £302,022. In the South East asking prices rose 0.7% month on month and are 6.9% higher year on year. In Greater London price growth is slowing with a month on month fall of 0.2% and asking prices are now 4.8% higher than a year ago at £643,117. Meanwhile growth has been steady in Wales, up 1.4% month on month and 6% year on year to £185,145. Overall, there have been price rises every month so far in 2016, showing that the uncertainty associated with the EU referendum has failed to halt this year’s upwards price momentum, according to Miles Shipside, Rightmove director and housing market analyst. He pointed out that this is in contrast to the run-up to the May 2015 general election, when the electoral uncertainty resulted in a price fall of 0.1% in the month of the election. ‘This year the first quarter buy to let surge has exacerbated the shortage of suitable property for sale, and with ongoing buyer demand fuelled by cheap mortgage money, there appears to be greater resilience. The result is that the average time it takes to sell a property is at its lowest level… Continue reading
