Tag Archives: brexit
Gross mortgage lending slows in UK post Brexit
Gross mortgage lending in the UK held steady in July and was an estimated £21.4 billion, similar to June but 1% lower than July last year. The data from the Council of Mortgage Lenders (CML) is the first full month since the country voted to leave the European Union and it is too soon to see how much of an impact Brexit is having. CML chief economist Bob Pannell explained that the subdued nature of property transactions and mortgage lending in July are consistent with a less positive backdrop for house purchase activity post-referendum. ‘The Bank of England expects stronger economic headwinds to build as we move into 2017, and the Monetary Policy Committee’s package of monetary policy measures represents a spirited effort to lean against these on a timely basis. The MPC has pencilled in a further cut in Bank Rate later this year, but aims to avoid negative interest rate territory,’ he said. ‘The Term Funding Scheme should boost market sentiment a little, by engineering broader cuts to rates for existing mortgage borrowers than would have been the case, but it is not clear how well the Bank’s actions will underpin borrower demand in a more adverse economic climate,’ he added. Steve Bolton, founder of Platinum Property Partners, pointed out that the buy to let market was particularly impacted and purchase activity in June had almost halved compared to a year ago but the buy to let remortgage activity has picked up year on year. ‘Landlords are well positioned to benefit from falling mortgage rates as a result of the recent base rate cut. A mortgage can often be one of the greatest costs for landlords, so swapping to a more affordable deal is well worth the effort,’ he said. ‘Landlords are now operating in an uncertain political and economic environment, and further legislative changes which will phase out the ability to treat mortgage interest payments as a legitimate business cost could lead to many leaving the market or being deterred from expanding their portfolio,’ he explained. ‘This could lead to rising rents for many tenants and less affordable housing provision in the Private Rented Sector. It will therefore be interesting to see how this will have a knock-on effect on mortgage lending,’ he pointed out. ‘However, investing in property has proven to give strong returns when done effectively. It is now more important than ever that amateur landlords ensure they manage their properties professionally to build a profitable long term investment,’ he added. According to John Goodall, chief executive officer of peer to peer platform Landbay, despite some Brexit uncertainty it is clear that the property market, and in turn the mortgage market, is built on strong foundations, so the outlook is optimistic. ‘The UK’s housing shortage will remain a pivotal political and social issue, so we should expect buyer demand and lending levels to bounce back later in the year as the dust settles. In the meantime, it’s… Continue reading
Brexit uncertainty created pause in UK home borrowing in July
The UK’s mortgage sector was hit in July as a result of the European Union referendum with both the number and value of house purchase approvals falling month on month and year on year. The BBA figures show that house purchase approval numbers were 19% lower than in July 2015, though in the first seven months of 2016 they were some 2% higher than in the same period of 2015. The data also shows that remortgaging approvals were 6% higher than in July 2015 and in the first seven months of 2016 were 21% higher than in the equivalent period of 2015. Overall gross mortgage borrowing of £12.6 billion in the month was 6% higher than in July 2015 while net mortgage borrowing is 3% higher than a year ago. As the first lending figures since the decision to leave the EU not much can be taken from them, according to Rebecca Harding, BBA chief economist. ‘The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote, but it is still early days. Many borrowing decisions will also have been taken before the referendum vote,’ she pointed out. Andy Knee, chief executive of LMS, said that the figures suggest home buyers took stock in July. He pointed out that the value of loans for house purchases fell to its lowest level since March 2015 following a buoyant first six months of 2016, ‘What remains to be seen is whether this will become the norm or if August activity will be bounce back following the immediate shock. On the other hand, despite a small fall remortgaging is up as existing home owners capitalise on the record low mortgages available,’ he explained. ‘Following the vote for Brexit, swap rates fell leading to lower mortgage rates across the board. At the same time, intense speculation about a decrease in the Bank of England interest base rate to 0.25% and other monetary policy interventions have also contributed to lower rates, encouraged lending and driven home owners to take advantage of this,’ he said. ‘Anecdotally, there is little to suggest a lull in the demand for house purchase and remortgaging. We therefore expect activity to bounce back in the autumn months once the dust settles and some sense of normality returns,’ he added. According to Tanya Jackson, head of corporate affairs at Yorkshire Building Society, believes that people’s desire to own a property largely outweighed any uncertainty caused by the EU referendum in July. ‘That said, the full effects of the vote are unlikely to be seen until a few months after the outcome of the vote was announced, as those buying a home in July are likely to have begun the house buying process before the EU referendum,’ she said. ‘We do expect the outcome of the EU vote to limit market activity to an extent in the short-term as prospective buyers take a wait and see approach on how it affects their finances…. Continue reading
House price sentiment increases in UK after Brexit low but still down on peak
Households across the UK believes that the value of their home rose in August but expectations remain muted following the decision to leave the European Union. Households in the East of England perceived the biggest price growth in August, followed by those in the South West and South East, according to the latest House Price Sentiment Index (HPSI) from Knight Frank and IHS Markit. Respondents in six of the 11 regions covered by the index believe prices increased over the course of the month and the future HPSI picked up in August with households still confident that the value of their home will rise over the next 12 months, albeit at a slower pace than before the EU referendum. Households in the South of England are more confident about price rises than those in the North of England, Scotland or Wales and overall 15.2% of the households surveyed across the UK said that the value of their home had risen over the last month, while 12.4% said that prices had fallen. A breakdown of the figures shows that with those in the East of England reported the biggest rises at 58.5, followed by those in the South West t 55 and the South East at 54.5. Scotland and the North East were the only two regions where sentiment fell month on month from 49.3 and 45 to 45.6 and 44.3 respectively. This resulted in a HPSI reading of 51.4. Any figure over 50 indicates that prices are rising, and the higher the figure, the stronger the increase. Any figure below 50 indicates that prices are falling. August’s reading was an increase from the 48.3 recorded in July following the EU referendum and took the index back into 50 plus territory. However, it remains notably below the average HPSI reading for the first six months of the year before the vote which was 59.9. It is also significantly lower than the peak of 63.2 recorded in May 2014. The future HPSI, which measures what households think will happen to the value of their property over the next year, rose to 58.3 in August from 50.3 in July. While the sentiment index has risen month on month, it remains subdued on a longer term basis. The last time the future sentiment index was below 60 for two consecutive months was back in March 2013. This report says that this suggests that while households are still positive, they are expecting more modest growth in property prices over the next 12 months. There remain regional variations in future house price sentiment, mirroring trends in the wider housing market. Households in the East of England are the most confident that prices will rise over the next year at 68.3, followed by those in the South West at 64.7 and the South East 63. ‘The greater political confidence instilled after Brexit by the swift appointment of a new Prime Minister, coupled with the Bank of England’s base rate… Continue reading
