Tag Archives: lending
Home lending in UK up by 8.5%, but some sectors seeing falls in recent months
Lending for home purchases in the UK increased by 8.5% year on year to £43.5 billion in the third quarter of 2015, according to the latest data from the Bank of England. However, the data also shows that the proportion of lending to first time buyers decreased in the quarter by 0.3% to 20.4% while the value of residential loans advanced to first time buyers increased by £0.6 billion from the third quarter of 2014 to £12.7 billion. The buy to let proportion of lending also decreased from 15.8% in the second quarter of 2015 to 15.6% in the third quarter of 2015 but increased by 1.3% from the third quarter of 2014. Advances, which include by to let remortgages, increased over the past year from £8 billion advanced in the third quarter of 2014 to £9.7 billion in the third quarter of 2015. This is the highest level of advances since the first quarter of 2009. Buy to let balances outstanding were £174 billion in the third quarter of 2015, which, at 14.5% of total residential balances is the highest proportion since the series began in 2007. The data also shows that the proportion of remortgages decreased from 26.2% in the second quarter of 2015 to 24.1% in the third quarter while the proportion of other new lending decreased from 3.6% to 3.4%. The proportion of gross advances at a loan to value (LTV) of over 90% decreased by 0.7% to 2.8% in the third quarter of 2015 while the proportion of gross advances to borrowers with a single income multiple of more than four time increased by 0.9% to 10.3%. According to Peter Rollings, chief executive officer of Marsh & Parsons, we can expect to see borrowing advance further after the Chancellor’s stimuli unveiled in the Autumn Statement. ‘With £15 billion of funding for housing measures taking prominence in his agenda, this will have given the green light to a queue of first time buyers, particularly in London, where there will be a designated Help to Buy scheme to reflect the accelerated house price growth in the capital, and the extra booster needed to help buyers onto the ladder,’ he said. ‘First time buyers have already been making tracks in the third quarter and in London we’ve seen this as part of wider demographic shift as domestic players and mortgage buyers become more prevalent in the housing market, while overseas investors take a temporary step back to digest the higher stamp duty payable on top-end purchases,’ he explained. ‘But proportionally, across the country, remortgaging activity has been taking up a larger chunk of the lending pie recently, as existing home owners try to build up their defences ahead of an expected interest rate rise in 2016. But the rankings may change in the run up to April’s stamp duty increase for second homes, and buy to let lending is likely to rev up quickly, as investors… Continue reading
UK house prices see high growth in East and South East
UK house prices increased by 0.8% in September and were 6.1% year on year, according to the latest data from the Office of National Statists (ONS). House price annual growth was strongest in Northern Ireland at 10.2% followed by England at 6.4% and there was a 1.1% rise in Wales and Scotland. Annual house price increases in England were driven by the East with year on year growth of 8.4% and the South East up 7.4%. But excluding London and the South East, UK house prices increased by 5% in the 12 months to September 2015. The data also shows that in September 2015, prices paid by first time buyers were 4.3% higher on average than in September 2014. For owner occupiers prices increased 6.9% for the same period. Neal Hudson, associate director of Savills research, pointed out that the continued growth in the ONS house price index highlights the impact of increasing competition by mortgage lenders on a low stock housing market. ‘Potential buyers that have a deposit are benefiting from historically low mortgage rates, increasing net lending, and are now able to borrow record high multiples of their income. That is despite the introduction of tougher affordability tests following MMR last year. The average buyer no longer has an average income, and so home ownership remains a dream for the many who still aspire to it,’ he added. The growth is being driven by constricted supply and fewer home owners selling, according to Rishi Passi, chief executive officer of Oblix Capital. ‘Improving economic conditions, rising wages and postponed interest rate rise expectations are all also bringing more buyers to the market, stoking up demand and inflating prices in the lower end of the market,’ he said. ‘The good news is that rising prices in this band will attract further investment and provide opportunities for developers, especially SMEs and should lead to an increase in attention paid to providing houses for this underserved end of the market,’ he added. Alex Gosling, chief executive officer of online estate agents HouseSimple, believes that there is likely to be a slight cooling in price growth in the coming weeks leading up to Christmas. ‘But, while demand continues to significantly outstrip supply, and interest rates remain static, we could well see a price spurt at the beginning of 2016. The market desperately needs a boost in new properties being listed if supply is ever to come close to catching up with demand,’ he added. First time buyers could be being outbid by existing home owners because they are more reliant on mortgages which are constrained by tougher lending criteria, according to Rob Weaver, director of Investments at property crowdfunding platform Property Partner. ‘Despite cheap finance, the tightening of the lending rules has made it increasingly difficult to get a mortgage and hence may be having a negative impact on supply. Longer term, property remains a good, solid investment… Continue reading
Buy to let mortgage lending still the star in the UK housing market
Mortgage lending to first time buyers in the UK increased by volume month on month and on an annual basis in September, the latest data from the Council of Mortgage Lenders shows. However, in contrast, lending to people moving home saw a dip in September compared to August, but grew by volume and by value compared to a year ago while home owner remortgage activity rebounded after a dip in August to increased levels in September both compared to a month ago and the same time last year. The buy to let sector continues to grow and saw year on year increases by volume and by value in both buy to let house purchase and buy to let remortgage sectors. The CML data also shows that first time buyers increased in number of loans advanced and amount borrowed both in comparison to quarter two and the third quarter last year and home mover lending saw a similar trend to first time buyers but the percentage increases by volume and by value were higher. Home owner remortgage activity saw an increase compared to the second quarter of the year, but a more substantial increase compared to the third quarter 2014 while buy to let saw large quarter on quarter and year on year increases by number of loans and amount borrowed. Paul Smee, director general of the CML, pointed out that the mortgage market had a slow start to the year. ‘This quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the New Year,’ he explained. ‘Buy to let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy to let landlords in September, and the growth in buy to let lending largely continues to reflect its more belated recovery from recession,’ he added. According to Rishi Passi, chief executive officer of Oblix Capital, on the one hand Help to Buy has driven up borrowing by first time buyers both in volume and value and on the other, there is little sign that impending buy to let tax restrictions are dissuading landlords from expanding their portfolios. ‘Meanwhile cheap money is allowing lenders to offer historically attractive rates to the market and as a consequence lenders are enjoying their best spell since 2008, enticing first time buyers and developers alike to move and borrow,’ he said. Rob Weaver, director of investments at property crowdfunding platform Property Partner, the growth in buy to let lending underlines the continued confidence UK investors have in this asset class. ‘As an asset class buy to let is also… Continue reading
