Mortgage approvals dip in March as buyers play it cautious

Mortgage approvals in the UK dipped in March, as buyers played it cautious in the aftermath of the country’s Brexit vote.

According to Bank of England figures, British lenders approved the smallest number of mortgages in six months, with approvals dipping to 66,837, below the 67,400 forecast by Reuters and the lowest number recorded since September 2016.

Mortgage lending, on the other hand, rose by £3.105 billion, reports Reuters, which notes that lending lags behind approval data. Nonetheless, the increase was the smallest rise recorded since November 2015.

According to figures from the BBA, house purchase approval numbers of 41,061 were also 2.8 per cent lower than in February 2017, albeit in line with the monthly average of 41,600 over the previous six months.

Remortgaging approval numbers of 24,657 were 2 per cent higher than in March 2016 but lower than in recent months and a little lower than the 2016 average of 26,000.

Gross mortgage borrowing in March totalled £13.2bn, much in line with recent months.

Eric Leenders, BBA Managing Director for Retail Banking, comments: “In March, annual growth in consumer borrowing from the main high street banks slowed, perhaps mirroring the dip seen in retail sales volumes as price rises appear to have started biting into consumers’ spending. House purchase approvals were largely in line with last year’s average, broadly reflecting a steady housing market.”


UK lending to be unaffected by 2017 general election

21st April 2017

UK borrowing will be unaffected by 2017’s general election, lenders predict.

The Council of Mortgage Lenders says that they “do not expect any marked effect” from the snap election, which was announced this week and will take place on 8th June.

The comments arrive despite a drop in mortgage lending during March. Indeed, while gross mortgage lending is estimated at a total of £21.4 billion for March, 19 per cent down year-on-year, the full was anticipated, as this time last year saw a surge in lending, as borrowers raced to beat the new stamp duty surcharge coming into force in April. Indeed, gross mortgage lending for the first quarter of 2017 is therefore an estimated £59.1 billion, a 6 per cent decrease on the £63.0 billion lent in the first quarter of 2016.

However, March’s lending was 19 per cent higher than February’s lending total of £17.9 billion.

“Mortgage lending appears to be in neutral gear. Our gross estimate for March is £21.4 billion and this is broadly in line with average monthly lending over the past year. Within this aggregate level, there has been a shift towards first-time buyer and remortgage customers, away from home movers and buy-to-let landlords,” comments CML senior economist Mohammad Jamei.

“We expect this profile to continue over the short-term, as low mortgage rates encourage existing borrowers to remortgage and government schemes help first-time buyers.”

Gross mortgage lending dips in February

27th March 2017

Gross mortgage lending in the UK dipped in February 2017.

New figures from the Council of Mortgage Lenders estimates that gross mortgage lending reached £18.2 billion in February. This is 8 per cent lower than January’s lending total of £19.8 billion.

First-time buyers and remortgaging continue to go from strength to strength, with lending holding up well – February 2017’s figures closely match the £18.1 billion lent in February 2016 – but buy-to-let activity stayed weak.

“Under the surface buyers face mixed fortunes,” CML senior economist Mohammad Jamei. “The weakness in home movers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013. This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.”


Remortgaging soars at start of 2017

17th March

Remortgaging in the UK has soared at the start of 2017, despite a relatively flat mortgage market.

Home buyers borrowed £8.4bn in January, down 28 per cent on December and unchanged on January 2016, according to the Council of Mortgage Lender’s latest figures. First-time buyers borrowed £3.6bn for home-owner house purchase, down 29 per cent on December but up 9 per cent on January 2016. Nome movers borrowed £4.9bn, also down 25 per cent on December and 4 per cent year-on-year.

Remortgaging, however, jumped 54 per cent by value and 46 per cent volume, both compared to December, while lending soared 22 per cent by value year-on-year and 22 per cent by volume.

Ishaan Malhi, CEO and founder of online mortgage broker Trussle, comments: “Today’s figures confirm that mortgage switching has become the major force driving up lending totals. It’s been almost half a year since the Bank of England cut interest rates down to 0.25 per cent, and the number of people switching mortgage to secure a more suitable deal has since soared, jumping by 21 per cent in January year-on-year. This follows on from the 14 per cent rise in remortgaging activity from 2015 to 2016.

“It’s encouraging to see so many more homeowners take control of their mortgage payments, especially at a time when households are struggling against low wage growth and rising inflation.”


First-time buyers fall in London

23rd November 2016

The number of first-time buyers getting on the housing ladder in London has fallen in the months following the UK’s EU referendum

According to the Council of Mortgage Lenders, home buyers in London took out 19,200 loans, worth £6.2bn, a 12 per cent rise compared to the second quarter but down 16 per cent compared to the same quarter in 2015. First-time buyers borrowed £3.1bn, up 7 per cent on the second quarter but down 5 per cent compared to the third quarter last year. This equated to 11,300 loans, up 7 per cent quarter-on-quarter but down 9 per cent year-on-year.

Paul Smee, director general of the CML, comments: “There have been quarter-on-quarter increases in the number of loans for house purchase and remortgage but the number of first-time buyers and home movers has decreased when compared to the same period in 2015. This is the first quarterly data after the EU referendum but it is unlikely to be very reliable as an early indicator of how the market in London will be affected. It does not appear that there will be drastic change in activity for the foreseeable future in a London market which has been stable for several years.”

The figures arrive as the mortgage sector in the UK looks to be broadly positive, with gross mortgage lending holding steady in October overall, at an estimated £20.6 billion, according to the CML – almost unchanged from September’s £20.5 billion and 5 per cent lower than October last year.

“Housing market sentiment is holding up well, with demand still strong. This has led to a pick up in approvals, as expected,” comments CML senior economist Mohammad Jamei. “The more pressing issue is on the supply side, where the lack of private sellers continues to be an obstacle for would-be borrowers. For this reason, we expect lending in the months ahead to be driven more by remortgaging activity and less by house purchases.”

UK mortgage costs reach historic low

15th November 2016

Mortgages in the UK have rarely been more affordable than they are right now, according to lenders.

The latest report from the Council of Mortgage Lenders show that activity several months after the UK voted to leave the European Union is showing signs of steadying, with home-owners borrowing £11.4 billion in September 2016, down 7 per cent month-on-month but up 4 per cent year-on-year.

First-time buyers borrowed £4.9bn, also lower (by 4 per cent) than the previous month, but 14 per cent higher than a year earlier.

“House purchase activity appears to have steadied, we may not be seeing huge increases in activity on the scale of 2013-14 but there is a consistency in the levels in recent months,” says Paul Smee, director general of the CML.

What is expected to boost activity in the coming months are mortgage rates, which have plummeted after the Bank of England cut its base rate to 0.25 per cent.

“Mortgage affordability reached an historic low in September, for both first-time buyer and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut,” comments Smee. “This should help turn strong appetite for home-ownership into a reality as we approach the closing months of the year.”


Mortgage approvals rebound amid Mark Carney speculation

31st October 2016

Mortgage approvals rebounded to a three-month high in September, the Bank of England announced today.

The number of loan approvals for house purchase rose to 62,932 in September, reaching a total value of £11.1 billion. The figures are below the average figure for the last six months, but outperformed expectations, painting a positive outlook for the coming months.

Indeed, the rebound occurs after mortgage approvals fell in July and August and arrives as speculation surrounds the future of Bank of England Governor Mark Carney. Reports at the weekend in the press claimed that Carney would depart his post in 2018, following the expiration of his initial five-year contract signed in 2013. However, since then, sources have told the Financial Times that he is ready to serve a longer eight-year term until 2021, steering the country’s economy through the upcoming Brexit negotiations.

“Nothing I have heard over the last few weeks – and I have spoken to many people in Mr Carney’s inner circle – suggests to me that the governor wants to leave in 2018,” commented Kamal Ahmed, BBC economics correspondent.

Regardless of any announcement by Carney this week ahead of its next Monetary Policy Committee meeting, sentiment in the housing market and its fundamentals continues to show signs of improvement in the months following the EU referendum. Indeed, the Bank of England’s figures follow data from the British Bankers Association, which also highlighted a rise in approvals in September compared to the previous month. The Royal Institution of Chartered Surveyors reported a pick-up in new buyer interest in September too.

Harry Landy, Sales Director, Enterprise Finance comments: “There is already a huge amount of speculation from the markets, media, politicians and public alike about what Brexit will mean for the financial services sector, but with today’s mortgage lending figures showing another increase, it would appear that housing market activity is stabilising – for the minute, at least.

“In line with this overall increase in lending, we at Enterprise Finance are also seeing an increase in second charge mortgage and bridging loan requests. We anticipate that this trend will only continue in the coming months, as advisers seek to navigate an increasingly volatile economic landscape by looking at tailored financing solutions to meet their clients’ needs. This would be especially true if the Bank of England chooses to reduce the base rate of interest at its next Monetary Policy Committee meeting.”


Resilient first-time buyers fuel rebound in mortgage lending

19th October 2016

Mortgage lending in the UK bounced back at the end of summer, as first-time buyers proved resilient in the face of Brexit uncertainty.

Lending rose 11 per cent year-on-year in August 2016, according to the Council of Mortgage Lenders, with homeowners borrowing £12.2 billion (up 11 per cent year-on-year), home movers borrowing £7.1 billion (up 3 per cent year-on-year), and landlords borrowing £3 billion (down 12 per cent year-on-year).

Remortgagers raced to take advantage of low interest rates in the wake of the EU refendum, but first-time buyers proved the most resilient, borrowing £5.1 billion, up 13 per cent month-on-month and 24 per cent year-on-year.

Both the number and the value of first-time buyer loans grew on a seasonally adjusted basis, as well as the unadjusted raw data. The monthly number of first-time buyers in August was the second highest of 2016.

Affordability metrics for first-time buyers have remained relatively stable. The typical loan size increased to £136,300 in August from £133,000 in July, against average household income up slightly from £40,200 in July to £40,900 in August.

Paul Smee, director general of the CML, comments: “House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity. Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months.”

“August’s figures from the CML present a picture of a return to normality,” says David Brown, CEO of Marsh & Parsons. “Despite the many uncertainties that still surround which form of Brexit the country will take, for many, the dust has settled and property remains a safe bet.”

“First-time buyer growth** is also positive and suggests the UK’s enthusiasm and appetite for home ownership has not been dented. It’ll be interesting to see what happens over the coming months with this group: confirmation that the Help to Buy Mortgage Guarantee scheme will end later this year could see first-time buyers clamouring to purchase before then,” he adds.


Mortgage approvals fall by a fifth, say high street lenders

26th September

Mortgage approvals in the UK fell by a fifth this summer, according to high street lenders, although they do not reflect the current market conditions.

Gross mortgage borrowing of £12.4bn in the month was 1 per cent in August 2016, compared to August 2015, according to the British Bankers’ Association, but house purchase approval numbers declined 21 per cent year-on-year. In the first eight months of 2016, they are 2 per cent lower than in the same period of 2015.

However, the figures do not include figures from building societies, which make up around a third of mortgage borrowing, and also provide a snapshot of the market in the immediate aftermath of the UK’s vote to leave the European Union. Indeed, since then, the Bank of England has cut interest rates to 0.25 per cent and confidence has begun to rebound among both consumers and property industry figures.

Dr Rebecca Harding, Chief Economist at the BBA, says: “The High Street Banking statistics published today point to a softer housing market, strong consumer credit and slightly weaker business borrowing in August. The data was collected before the Bank of England reduced interest rates to 0.25 per cent and so give an indication of some of the underlying pressures that the MPC was responding to when it made this decision.

“Mortgage borrowing is growing at a slower pace than it has for the last few months reflecting both the slowdown in housing market growth after the April spike and broader trends in the sector,” she adds.

Consumer credit, on the other hand, continued to show annual growth of over 6 per cent, reflecting fairly strong retail sales and, in the case of personal loans and overdrafts, favourable interest rates.

“Given the low interest rate environment and high levels of confidence during the summer, the strong credit growth can be interpreted as strong consumer sentiment,” she comments.


UK mortgage lending rebounds to nine-year high

22nd September 2016

UK mortgage lending has rebounded to a nine-year high this summer, reveal new figures from lenders.

Mortgage approvals fell to an 18-month low in July 2016, according to figures from the Bank of England, which was attributed to the impact of the EU referendum result upon the market. In August, though, CML data shows that gross mortgage lending reached an estimated £22.5 billion in August – 7 per cent higher than July and up 15 per cent year-on-year to reach the highest August figure since 2007, when gross lending was £33.6 billion.

CML senior economist Mohammad Jamei says that fears voiced in recent months about the housing market “have proved to be wide of the mark”.

“Prospects for house purchase activity post-referendum look slightly subdued, when compared to late 2015 and early 2016. However, sentiment in the market recovered in August. This is reflected in stronger-than-expected transaction figures, and in our gross lending estimate,” he comments.

“This recovery in sentiment is likely to be down to a number of different factors, including the Bank of England’s monetary stimulus and its introduction of the Term Funding Scheme in August. A subsequent uptick in approvals is anticipated, albeit still at levels lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers.”

Responding to the CML figures, Henry Woodcock, principal mortgage consultant at IRESS, said:
“The holiday month of August typically has a seasonal downturn in lending compared to July. In 2015 August was 8% lower than July. So it’s surprising to see lending grow in August with gross mortgage lending up 7% on July and 15% from August 2015.
“The market bucked the indicators that would have suggested a drop in lending. The National Association of Estate Agents saw a 35% drop in the average number of registered house hunters during July. According to the CML, the number of mortgages advanced for house purchases fell in July by 14 per cent compared with June. And figures from the Bank of England revealed that mortgage approvals fell to an 18-month low in July to 60,912, the lowest value since January 2015.
“Will the Autumn bring more good news to the market?
“Many commentators believe mortgage approvals are now likely to fall over the coming months as the combination of a waver in consumer confidence and economic uncertainty causes people to reconsider moving or buying a first home.
“House prices are also experiencing a bit of uncertainty, with the Nationwide index showing prices edging up by 0.6% from July to August, but Countrywide predicting that after a modest annual rise, prices might drop by 1% in 2017.
“If there are no unforeseen bumps in the economy, the optimist in me – encouraged by these figures – would expect mortgage approvals and advances to increase further over the coming months – but at lower levels of growth than in 2015 – as lenders seek to hit end of year targets.”


Business as usual for UK as mortgage lending stays steady post-referendum

25th August 2016

It was business as usual for the UK mortgage sector in July, as lending stayed steady in the weeks following the EU referendum.

Gross mortgage lending held steady in July, according to the Council of Mortgage Lenders, hitting an estimated total of £21.4 billion. This closely matches June’s gross lending total of £21.5 billion and is only 1 per cent lower than July last year (£21.6 billion).

Figures from the BBA, also released this week, echo the positive mood. According to the BBA high street stats, gross mortgage borrowing of £12.6bn in the month was 6 per cent higher than in July 2015, with net mortgage borrowing 3 per cent higher than a year ago. House purchase approval numbers were 19 per cent lower than in July 2015, although in the first seven months of 2016, they were 2 per cent higher than in the same period of 2015. Remortgaging approvals were 6 per cent higher than in July 2015 and in the first seven months of 2016, were 21 per cent higher than in the equiivalent period of 2015.

“This month’s BBA High Street Banking statistics are the first set of borrowing figures gathered since the EU referendum. The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote,” says Dr Rebecca Harding, BBA Chief Economist, “but it is still early days.”

John Eastgate, Director of Sales at OneSavings Bank, says that fears of a slump in the event of a Brexit vote appear overblown.

“While the medium to long term economic impact of the decision is far from clear, the mortgage market would appear to be in business as usual mode,” he comments. “Buyers, and in particular, investors, who are in a position to enter the market are just getting on with it, rather than sitting on their hands and waiting for the political and economic uncertainty of Brexit to dissipate. Moreover, the Bank of England’s package of monetary stimulus measures opens up the possibility of even cheaper mortgage products. This will continue to stimulate buyer demand, as well as supporting buoyant remortgage activity as borrowers look to take advantage of the incredibly low rates on offer.”

Indeed, deVere Mortgages says that it has seen a notable rise in activity, as a result of the Bank of England’s rate cut.

Week on week mortgage enquiries have increased by an average of 55 per cent since rates were lowered from 0.5 per cent to a historic low of 0.25 per cent earlier this month.

Mike Coady, Managing Director of deVere Mortgages, which specialises in UK mortgages for expats and overseas buyers, comments: “This is one of the biggest surge in mortgage enquiries we’ve received since deVere Mortgages was launched as a standalone brand in 2015. The decision by the Bank of England to cut interest rates has, we believe, acted as a catalyst for many individuals to now actively enquire about a mortgage.”

“Before the Brexit vote many people had been delaying taking action until the referendum result was revealed so they could see how the land lies; and this interest rate cut has now provided extra impetus to act now to secure a home loan,” he adds.

CML chief economist Bob Pannell nis cautiously optimistic, noting that the Bank of England still anticipates “stronger economic headwinds to build as we move into 2017”, while the MPC has “pencilled in a further cut in Bank Rate later this year, but aims to avoid negative interest rate territory”.

Nonetheless, mortgage experts have emerged the other side of the Brexit vote with a spring in their step.

Henry Woodcock, principal mortgage consultant at IRESS, observes: “After the EU referendum the housing and mortgage markets largely shook off the short-term uncertainty and quickly got back to business as usual. While the overall picture is stable, an interesting and unexpected regional housing outcome from Brexit is that there appears to be a ‘confidence correlation’ between areas that voted to remain compared to those that voted to leave. There seems to have been a positive effect on the housing market in the areas of the Country that voted for Brexit whereas areas that voted ‘Remain’ have seen a corresponding dip in activity.”