Tag Archives: lending
Mortgage lending in UK fell in February month on month, no big change expected
Gross mortgage lending reached £17.6 billion in February, some 5% lower than January but 30% higher than February last year, according to the latest estimates from the Council of Mortgage Lenders. It is, however, the highest lending total for a February since 2008 when gross lending reached £24.1 billion. ‘Lending continues the year on a positive note, with our monthly estimate showing an increase of 30% in February compared to a year ago. This growth rate is in line with what we saw in the closing months of 2015,’ said CML economist Mohammad Jamei. He explained that the recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals but the CML thinks it is unlikely that there will be any significant acceleration in lending. ‘While there may be a slight current boost to lending as some transactions seek to complete before the 01 April tax changes in the buy to let sector, this is likely to be followed by a slight fall in activity. Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently,’ he added. Andy Knee, chief executive of LMS, believes that apart from a slight dip in activity expected following the April tax changes, all factors are working in the mortgage market’s favour. ‘Despite a delay in the base rate rise, the remortgage market in particular is likely to continue unabated, with home owners sitting on record housing equity and capitalising on the hugely competitive rates currently available,’ he pointed out. According to Peter Rollings, chief executive officer of Marsh & Parsons, once the April deadline passes it will quickly revert to business as usual, and a subsidence in buy to let borrowing will likely water down the growth in the mortgage market. ‘The Chancellor is certainly laying the long-term foundations for future mortgage lending levels, with the Lifetime ISA announcement just the latest guise to help first time buyers save up for a deposit and get onto the property ladder,’ he said. ‘But these savers are a long way down the pipeline, and in the immediate term, borrowing is more likely to feel the brunt of measures affecting the buy to let market. Property investors were completely overlooked in the Budget, and the Chancellor’s move to exclude landlords from the tax break on capital gains seems at odds with the need for greater supply of property on the market. Any measure that discourages and disincentives selling homes is not helpful in the current climate, and for buyers trying to keep track of house prices,’ he added. Continue reading
Buy to let lending grew in 2015 at expense of first time buyers
The rapid growth of the buy to let market in the UK during 2015 was at the expense of first time buyers despite Government initiatives to encourage home ownership, new research has found. The proportion of buy to let mortgage enquiries grew by 4.4% to 18.2% during 2015 compared with 2014, whereas the proportion of enquiries for first time buyers fell by 3.7% to 23.5%. According to price comparison website comparethemarket.com the inverse correlation indicates that the buy to let market has gained a chokehold over first time buyers, as many struggle to get out of rented accommodation and on to the housing ladder. January showed no signs of a reducing market, as the first month in 2016 showed year on year growth of over 16% and 62% increase compared to December, reinforcing the sentiment that the current buy to let market may be unsustainable. Evidence indicates that if the market continues in its current direction, the number of enquiries for buy to let mortgages will outstrip the number for first time buyer enquiries, which would be a blow to the Government’s home ownership drive. Overall the buy to let market saw growth during of over 23% in enquiries on the website in 2015 and the initial cut on tax relief also did little to reduce the swelling of the buy to let market as enquiries rose by 14% in the three months after the announcement made by the Chancellor at the Summer Budget, compared to the three months before. However, with the new stamp duty on buy-to-let properties, announced at the Autumn Statement, coming into effect this spring, many expect the market will finally dampen. Elsewhere, January proved to be a particularly buoyant month for the mortgage market as the number of enquiries rose by more than 8% compared to 2015. It seems that January is the time that consumers get their respective houses in order with a recent study by comparethemarket.com finding that 44% of consumers used the month to ‘sort out’ their finances. ‘The buy to let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability,’ said Jody Baker, head of money for comparethemarket. ‘This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the Government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 01 April,’ Baker added. Continue reading
Latest data reveals success of UK govt’s flagship Help to Buy schemes
Over 150,000 people have achieved their aspiration of home ownership In the UK since the government’s flagship Help to Buy housing schemes were launched two years ago, the latest data shows. Some 80% were first time buyers, the average house price was £188,380 significantly below the national average, over half were for new build homes and 95% of Help to Buy completions took place outside of London. The figures confirm that it is first time buyers, for whom the scheme was designed, have indeed benefitted the most with 118,000 households having bought their first home via the scheme. First time buyers will have a further boost from the Help to Buy: Isa launched in December 2015. The scheme has already helped a quarter of a million first time buyers save for their first home by providing a bonus of up to £3,000. With almost all completions outside London, the highest number of homes through the mortgage guarantee scheme have been in the North West region and the equity loan scheme for new build properties is particularly prevalent in the South East region. First time buyers and second steppers will also have a further boost from the London Help to Buy scheme launched in February 2016. The scheme supports purchases of new build homes in the capital by offering a 5% deposit backed by an equity loan of up to 40% from the government. Figures for the mortgage guarantee scheme also show completions have been least concentrated in regions where house price growth is highest. In London the scheme makes up just 1% of all mortgage lending compared to an average of 3% across the country. Over half of the homes bought through Help to Buy are new-build properties, helping to contribute to the 14% rise in private house building since the launch of Help to Buy. This has supported new housing construction output with total new housing construction activity in 2015 the highest on record. Annual housing starts are now at an eight year high with over 700,000 new homes built since 2010. ‘The government is committed to helping people achieve the aspiration of buying their own home, and all our Help to Buy schemes have now helped almost half a million people,’ said Chancellor of the Exchequer George Osborne. However, he pointed out that while the stronger financial system means the Government expects banks to start to exit the Help to Buy Mortgage Guarantee scheme, the other Help to Buy schemes go from strength to strength. ‘Increased confidence coupled with our clear ambition to deliver one million new homes is leading to more house building with the numbers of new homes at a seven year high. Government backed schemes are helping an increasing number of people to realise that home ownership is realistic for them,’ said Communities Secretary Greg Clark. Housing Minister Brandon Lewis acknowledged that there is more work to be done to get the homes built people want but described the figures as… Continue reading
