Posts with tag: mortgage approvals

Mortgage approvals up by 8%

Published On: July 24, 2015 at 4:29 pm

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Latest figures suggest that high-street banks have seen a yearly increase in the number of mortgage approvals.

BBA’s figures for high-street banks indicate that year-on-year, approvals have risen by around 8%. In addition, remortgaging was 20% higher, suggesting borrowers are keen to secure current fixed-rate deals and gain more certainty for the short-term future.[1]

Pick-up

Data also shows that gross mortgage borrowing hit £11.5bn in June, which was 6% higher than at the same stage one year ago. Also, after a slow up in demand during the second half of 2014, overall mortgage stock is 1.1% higher than the same period last year.[1]

Richard Woolhouse, Chief Economist at the BBA noted, ‘the housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed mortgages ahead of a possible rise in interest rates.’[1]

Brian Murphy. Head of Lending at Mortgage Advice Bureau, commented, ‘a substantial leap in mortgage approvals this June suggest the housing market has once again stepped up a gear, building on the steady growth over the previous three months.’ Murphy believes despite the restrictive housing supply, ‘record low interest rates are helping to ease affordability concerns for those borrowers who can stump up enough money for a deposit.’[1]

‘As a result, lower earners are increasingly active in the purchase market and can borrow with the confidence that their finances are being thoroughly stress tested against the prospect of higher rates in future,’ Murphy added.[1]

Mortgage approvals up by 8%

Mortgage approvals up by 8%

Confidence

Mark Harris, chief executive of mortgage broker SPF Private Clients believes, ‘with the general election finally out of the way, strong lending figures demonstrate that confidence in the housing market continues to improve.’ Harris warns however, ‘the real growth in lending has been on the remortgaging side, with borrowers keen to snap up a cheap fixed-mortgage. With Mark Carney’s recent comments about a potential rate rise at the turn of the year, we expect to see significant growth in the number of people remortgaging in coming months.’[1]

‘While more people are enquiring about remortgaging, there are many who will sit on their hands and wait until interest rates actually start to rise. Anecdotally, the first rate rise is the trigger point for many people remortgaging but it may even be the second or third increase, as that is when there is a significant impact on a household’s expenditure and people then remortgage to ‘save’ money. However, by then the best fixed rates will have long gone,’ Harris concluded.[1]

[1] http://www.propertyreporter.co.uk/finance/mortgage-approvals-rise-8.html

 

Mortgage Approvals Rise in Q2

Published On: July 13, 2015 at 4:59 pm

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Mortgage approvals in April and May were higher than the first quarter’s (Q1) average, as mortgage rates are still at record low levels, revealed the Bank of England’s (BoE) Q2 credit conditions review.

Remortgaging approvals also rose in Q2, however, mortgage approvals for house purchases and remortgages are still considerably lower than in the years before the financial crisis.

Mortgage Approvals Rise in Q2

Mortgage Approvals Rise in Q2

The monthly net flow of mortgage lending grew slightly in the three months to May, however, the BoE found that some major lenders now expect total gross mortgage lending in 2015 to be fairly similar to 2014, compared with initial predictions of an increase.

The most recent data reveals that demand for house purchase secured lending dropped substantially in Q1 for the third consecutive quarter, but was expected to rise in Q2.

Mortgage rates continued to fall in the last few months, remaining at record low levels, meaning the overall effective rate on new mortgages decreased in the three months to May.

The most quoted fixed mortgage rates – the rates offered to borrowers – also declined during Q2.

The report claims that in recent discussions, most major lenders do not expect rates to drop much further at lower loan-to-value (LTV) ratios, but some said there is some room for reductions in higher LTV products.

Lenders also said that the availability of secured credit to borrowers with LTVs above 75% rose in Q2, although their desire to lend at LTVs above 90% was unchanged. Market share objectives and a changing attitude towards risk are believed to have boosted credit availability slightly.

The study also found that lenders reported a slight easing in credit scoring criteria and in the future, the availability of secured credit is expected to rise slightly in Q3.

Demand for secured lending for house purchases grew significantly in Q2, according to respondents to the survey, after falling in the past three studies.

Respondents reported a huge rise in demand for prime and buy-to-let lending, and the BoE mentioned the Royal Institution of Chartered Surveyors’ new buyer enquiries balance being positive in Q2.

 

 

Mortgage Figures Confirm Pre-Election Slowdown in Market

Published On: June 30, 2015 at 8:58 am

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Categories: Landlord News

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Mortgage approvals in the UK dropped significantly in May, confirming observations by estate agents of a pre-election slowdown in the market.

Mortgage Figures Confirm Pre-Election Slowdown in Market

Mortgage Figures Confirm Pre-Election Slowdown in Market

In May, 64,434 mortgages were granted by Britain’s major lenders, down from 67,580 in April, revealed data from the Bank of England (BoE).

Most analysts were expecting a small increase, however, the figures reflect evidence from within the industry of less activity and price rises in the pre-election period.

As inflation is low, mortgage rates are close to record lows, wages are beginning to grow and consumer confidence is high, economists are forecasting a stronger housing market over the summer.

Chief UK Economist at Deutsche Bank, George Buckley, says he expects “approvals to continue on an upwards trajectory.”1 

Consumer credit was also slightly weaker than expected, up by £1 billion in May, down from £1.1 billion in April.

Senior UK Economist at Capital Economics, Samuel Tombs, believes the May figures are a “lull” with demand picking up.

He adds that although the Mortgage Market Review (MMR) and the Financial Policy Committee’s restrictions on high loan-to-income lending will “prevent a major increase in supply of secured credit, we still think that credit flows will continue to recover in the second half of this year.”1

In the latest survey by the Royal Institution of Chartered Surveyors (RICS), members revealed that although buyer interest is stronger, there is a huge undersupply of homes, with the stock of properties per surveyor at a record low since records began in 1978.

Chief Economist at RICS, Simon Rubinsohn, says that due to the shortage, “it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable.”1

1 http://www.ft.com/cms/s/0/0db0b4b6-1e3b-11e5-aa5a-398b2169cf79.html?ftcamp=published_links%2Frss%2Fcompanies_property%2Ffeed%2F%2Fproduct#axzz3eRz5F7jD

Mortgage Approvals Increase by 10% in April

Published On: June 4, 2015 at 9:32 am

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The amount of loan approvals for house purchases was 68,076 in April, up from the average of 60,679 for the previous six months, revealed data from the Bank of England (BoE).

The number of approvals for remortgaging also rose, to 35,930, compared to the average of 32,308 over the last six months. For other purposes, approved loans increased to 10,623 in April, from 9,404 in the past six months.

The BoE’s report also revealed that the lending secured on dwellings grew by £1.7 billion in April, compared to the average monthly rise of £1.8 billion for the six months previously. Gross lending secured on dwellings was £17.1 billion and repayments were £15 billion.

Head of Lending at the Mortgage Advice Bureau (MAB), Brian Murphy, says: “One year after the Mortgage Market Review [MMR], today’s BoE data suggests there is much greater confidence in the mortgage market, with all types of mortgage approvals during April considerably above the average for the previous six months. Total approvals are also up 9% compared to last April, suggesting the market is adjusting back to normal now that the MMR has bedded in.

Mortgage Approvals Increase by 10% in April

Mortgage Approvals Increase by 10% in April

“Remortgage approvals have risen at twice the rate of house purchase approvals over the past year, despite tougher affordability checks which some feared would imprison consumers in their existing deals. Falling mortgage rates have boosted demand in the remortgage sector and there are significant savings to be had for borrowers moving away from their lender’s Standard Variable Rate [SVR].

“With the election clearly having little impact on mortgage activity, the outlook for the rest of 2015 remains positive. Lenders have a healthy appetite for business and affordability conditions are being helped by the low rate environment. However, today’s rock-bottom prices can’t last forever and it is likely we’ll see greater levels of mortgage activity as borrowers seek to lock into a preferable rate while they still can.”1 

Executive Director of the Intermediary Mortgage Lenders Association (IMLA), Peter Williams, comments: “Today’s BoE data shows the mortgage market finally hit the accelerator in April with the highest number of loans approved since February 2014. A 10% monthly jump in mortgage approvals is the biggest for over two years and an encouraging sign for consumers that there is plenty of life left in the mortgage market.

“Lenders have been forced to batten down the hatches over the last year to adapt to new regulations.”

Williams continues: “With the Mortgage Credit Directive [MCD] on the horizon, we are still caught in the eye of the regulatory storm, so it is reassuring to see that more people are being approved for loans than at any point since the MMR rules took effect. In particular, the rush of remortgaging proves that existing borrowers are still able to switch loan under the new affordability regime.

“Lenders are working hard behind the scenes to prepare the ground for the MCD and ensure the transition is as smooth as can be hoped for in practise, so there is every prospect for modest but sustained growth in the second half of this year.”1 

Peter Rollings, CEO of Marsh & Parsons, notes: “The mortgage market has pulled through the winter stupor and jumped into action with an impressive upwards leap in April. Lending is starting to stretch out its limbs, as banks and borrowers alike are finally starting to fully understand last year’s MMR changes and navigate them effectively.

“In addition, the election affect can be overstated. Households who had been steadily saving for a deposit and lining up to buy weren’t going to suddenly park their aspirations while politicians debated theirs. Despite the question mark hanging over the property market at the time, the biggest unknowns were for the million pound levels of the market, and for many buyers, low mortgage rates and reduced Stamp Duty made it worth their while to keep moving.

“Now that the new Government has nailed its colours to the mast and made commitments to bolster house building, demand will be further galvanised at all rungs of the ladder and we’ve already seen a significant upswing in buyer registrations in May. Lending is now streaks ahead of a year ago, and with buyer confidence also leading the pack, the only way looks to be up.”1 

Sales and Marketing Director at Phoebus Software, Richard Pike, concludes: “After a few months of a fairly stagnant market, the figures announced this morning by the BoE, showing a 10% increase in month-on-month approvals, are encouraging. Many predicted the lull before the election, but it appears as though there were other factors that encouraged people to move or get onto the property ladder even before election uncertainty was removed.

“With all things considered: Stamp Duty, Help to Buy, low interest rates, higher loan-to-values and lenders once again willing to lend, the market is ripe for growth. If further predictions for the year are to be believed then we are now in for a more buoyant period, which seems most likely.”1

1 http://www.propertyreporter.co.uk/hero/april-sees-10-rise-in-mortgage-approvals.html

Mortgage approvals rise at largest rate for 6 years

Published On: June 3, 2015 at 3:55 pm

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The latest Bank of England Money and Credit Report has given encouragement to the property market.

According to the report findings, approvals for mortgage rose in April to their largest amount since 2009. In total, 68,076 house purchases mortgages were rubber-stamped last month, an increase of 9.89% from March and the highest rise since February six years ago.[1]

Confidence

These results are sure to buoy the mortgage market as they suggest that confidence appears to be growing, one year after the implementation of the Mortgage Market Review. All types of mortgage approvals during April were substantially above average for the last six months.

Head of lending at the Mortgage Advice Bureau, Brian Murphy, said that, ‘remortgage approvals have risen at twice the rate of house purchase approvals over the past year, despite tougher affordability checks which some feared would imprison consumers in their existing deals.’ He went on to say that, ‘falling mortgage rates have boosted demand in the remortgage sector and there are significant savings to be had for borrowers moving away from their lender’s standard variable rate.’[1]

Mortgage approvals rise at largest rate for 6 years

Mortgage approvals rise at largest rate for 6 years

Positive

Mr Murphy also said that, ‘with the election clearly having little impact on mortgage activity, the outlook for the rest of 2015 remains positive. Lenders have a healthy appetite for business and affordability conditions are being helped by the low rate environment.’[1]

He warns however that, ‘today’s rock-bottom prices can’t last forever and it is likely we’ll see greater levels of mortgage activity as borrowers seek to lock into a preferable rate while they still can.’[1]

[1] http://mortgageadvicebureau.com/news/Mortgageapprovalsjumpbyhighestamountinsixyears/1028/

 

Mortgage Market Review Causes Decline in Buyers

Published On: April 27, 2015 at 2:57 pm

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Two thirds (65%) of estate agents have reported a decline in buyers following the Mortgage Market Review.

Yesterday marked the first anniversary of stricter lending criteria, the Mortgage Market Review (MMR). The MMR was created to help lenders make better decisions over borrowers.

The Financial Conduct Authority said that the MMR would protect borrowers and mortgage providers alike.

From the start, borrowers complained about invasive questions into their spending. Soon after, other issues emerged. Older borrowers were being denied loans and some borrowers became trapped on high rates.

Managing Director of the National Association of Estate Agents (NAEA), Mark Hayward, explains the impact of the MMR: “This Sunday sees the anniversary of the MMR coming into play and we can now really see the substantial effects it has had on the property market.

“The new rules, which introduced stricter guidelines for lenders, have led to two thirds of NAEA estate agents reporting a decrease in the number of buyers.

“A drop in the number of buyers is the direct result of a slow-down in acceptance of mortgages, with it now taking an average of 50 days to receive a mortgage offer. This increases the risk that sales won’t go through and puts unnecessary pressure on any chain transactions.”1

Amount of mortgages

The MMR contributed to a decrease in mortgage lending, for both property purchasers and remortgages. 48,500 new mortgages were approved for purchase in February 2014, worth a total of £7.8 billion, found the Council of Mortgage Lenders (CML). In February this year, that figure dropped to 40,600 worth a total of £6.8 billion.2

Despite mortgage rates being at record lows, remortgages also declined from 24,900 in February 2014 to 21,500 this year.2

Mortgage Market Review Causes Decline in Buyers

Mortgage Market Review Causes Decline in Buyers

Some lenders claim to approve 90% of all mortgage applications, but Ray Boulger of broker John Charcol believes that this number is misleading: “This figure relates to borrowers who have already passed the decision in principle stage.

“Many others will have been turned away at the first hurdle. It’s a clear case of lies, lies and statistics. The reforms have increased the number of borrowers who are turned down for a mortgage, and in some cases they are more than capable of affording a loan.”2

First time buyers

The amount of first time buyers has dropped by over 16%, from 22,300 in February 2014 to 18,700 in February 2015. The total value of these mortgages fell from £3.1 billion to £2.7 billion.2 

Furthermore, fewer homeowners are moving since the MMR. For so-called second-steppers, 21,900 loans were approved this year, down from 26,200 in February 2014. The value of these mortgages dropped from £4.7 billion to £4.1 billion.2

Trapped

The MMR did not just cause a decline in buyers, it created mortgage prisoners. The new rules mean that borrowers cannot switch to another lender or even another deal. There are no definite figures to indicate how many people are trapped with their existing lender, but Boulger predicts a huge 40% of all borrowers are mortgage prisoners, often on high rates.

Some homeowners cannot transfer their current loan to a new property, called porting, because they do not meet the new affordability requirements. Other borrowers are stuck on their lender’s expensive Standard Variable Rate (SVR).

Older borrowers

Older borrowers are being turned away because they will be over 65-years-old when the loan ends. Lenders are now refusing to offer 25-year mortgages to borrowers in their 40s. Buy-to-let loans, not included in the MMR, are available until the age of 105.

Most interest-only borrowers not wanting to move to a repayment loan cannot change lender. There is also a large proportion of borrowers who used the now invalid self-certification loans, which did not require income approval, who no longer qualify for new deals.

The Financial Ombudsman says that it has seen a “notable rise” in complaints about age, porting and remortgaging. A spokesperson says: “Some lenders have adopted a ‘computer says no’ mentality, with decisions lacking common sense.”2 

Securing a loan

Hayward says that it is now taking longer to secure a loan, with the average time rising from 37 days to 53 days.

He concludes: “The longer transactions take to go through, the more chance there is that the chain will break. Lenders are asking a lot of additional questions about income and affordability, which slows the process. Last summer when house prices were rising rapidly, we saw a lot of cases where buyers were gazumped by higher offers just weeks after agreeing a sale.”2 

1 http://www.naea.co.uk/news/april-2015/mortgage-market-review/

2 http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11561001/One-year-on-from-tough-new-mortgage-rules-How-it-affected-you.html