Posts with tag: Mortgage lending

Figures for Final Month of Lending Before PRA Changes Revealed

Published On: October 25, 2017 at 9:22 am


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Figures for Final Month of Lending Before PRA Changes Revealed

Figures for Final Month of Lending Before PRA Changes Revealed

UK Finance has released the latest figures for the mortgage lending market, which show the scope of the sector in the final month before new lending rules for portfolio landlords were introduced.

UK Finance estimates that gross mortgage lending for September was £21.4 billion, which is 5% higher than a year ago. High street banks carried out almost two-thirds of this lending, or £13.7 billion.

From 30th September 2017, lenders have been required by the Bank of England’s Prudential Regulation Authority (PRA) to introduce stricter criteria on portfolio landlords – defined as those with four or more mortgaged buy-to-let properties. We have created a guide to help you understand these changes: /landlords-guide-pra-portfolio-underwriting-changes/

Commenting on the data, the Senior Economist at UK Finance, Mohammad Jamei, says: “As we near the end of 2017, our data is showing that housing market activity has built up modest momentum since the start of the year, helped by an increase in first time buyer numbers.”

John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, also responds to the figures: “Mortgage lending activity dipped slightly in September, but remains significantly up on last year’s levels, as borrowers continue to take advantage of record low interest rates and loan-to-value [LTV] deals. These more accommodating borrowing conditions are, however, set to change in the coming months, as the prospect of the first interest rate rise in almost a decade looms large, putting pressure on borrowers and potentially putting off first time buyers.

“September’s figures also offer some insight into the final month of lending before the PRA’s portfolio landlord changes came into effect. While these new regulations are a good thing for the sustainability of the buy-to-let sector, we may see a dip in lending in the coming months as the sector adjusts to both the new regulations and a possible rate change.”

John Bagshaw, the Corporate Services Director of Connells Survey & Valuation, offers his thoughts: “Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end. Many older mortgage deals are expiring this autumn, which will mean moving onto more expensive Standard Variable Rates. As a result, homeowners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now. With so much economic uncertainty and hints of a base rate rise, many are choosing to lock into a lower rate to see them through the next few years.”

We also have a response from John Eastgate, the Sales and Marketing Director of OneSavings Bank: “Mortgage lending has grown modestly since the start of the year and is heading towards the levels last seen in 2008. Despite growing concerns around affordability, much of this demand is coming from first time buyers, largely driven by Government initiatives such as Help to Buy. With a rate rise in the offing, however, borrowers may well have to face up to the reality that they’ve missed the opportunity to secure the lowest mortgage rates in history.

“The mortgage market continues to demonstrate sustainable growth, but not without challenge. Real wage growth is in negative territory, and supply shortages continue to drive up prices, albeit modestly, in most parts of the country. Nevertheless, with property transactions on an even keel, neither seem to be a threat to ongoing growth.”

UK Finance Releases Gross Mortgage Lending Figure for July

Published On: August 24, 2017 at 9:40 am


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This morning, UK Finance released its gross mortgage lending figure for the month of July.

The organisation estimates that overall gross mortgage lending stood at £23 billion in July. Accounting for seasonal factors, this figure is above the average lending figures seen over the past year.

First time buyers and remortgage activity by homeowners have supported lending for some time, but UK Finance anticipates the pace of growth to slow slightly, dampened by a potentially more challenging economic outlook.

The UK Finance data also shows that consumer borrowing from high street banks remained stable in July, at 2%, compared to 1.9% in the previous month.

UK Finance Releases Gross Mortgage Lending Figure for July

UK Finance Releases Gross Mortgage Lending Figure for July

Eric Leenders, the Head of Personal at UK Finance, comments: “Consumer borrowing from high street banks remained stable in July, as continued pressure on household budgets reduced spending and saving.

“It is business as usual for business lending, as companies continue to borrow less and build their reserves, increasing deposits at an annual rate of 7.5%, while larger corporates are using the capital markets for funding.”

He continues: “Steady levels of mortgage activity seen through the first half of the year continued into July. First time buyer numbers continue to be strong, helped in part by Government schemes. But that has been offset by home movers, where a shortage of homes on the market is limiting their activity.”

The Marketing Director of Foundation Home Loans, Jeff Knight, also says: “First time buyers and remortgaging have kept enough wind in the sails to support lending levels, despite the obvious challenges brought about by shifts in tax policy, Stamp Duty and lingering economic uncertainty.

“Looking longer-term, however, the changes in buy-to-let tax relief, alongside new underwriting standards, will bring additional strain. Landlords have already started streamlining portfolio sizes to avoid taking a hit and, while this is a wise choice for some, it’s equally important the rented sector offers choice and a positive option for tenants.”

Knight adds: “With the summer slowdown approaching and the PRA [Prudential Regulation Authority] regulation less than a month away, we need to ensure landlords are engaged with all the opportunities the market has to offer – and that includes support to help navigate the changes.”

Shaun Church, the Director of mortgage broker Private Finance, offers his thoughts: “Mortgage lending has grown over the past year, despite considerable political uncertainty, stagnant wage growth and house prices continuing to creep up: a testament to the enduring demand for property.

“First time buyer and remortgage activity continues to act as the market’s driving force, as borrowers seek to take advantage of the low rates on offer. Competition between lenders means borrowers have a growing number of competitive products to choose from.

“Not all segments of the market are performing so well, however, with the buy-to-let sector yet to recover from being bludgeoned by repeated regulatory changes. Properties at the upper end of the market continue to suffer the consequences of changes to Stamp Duty, restricting flow of movement in the market and contributing to the lack of new homes coming up for sale.”

The CEO and Co-Founder of buy-to-let specialist Landbay, John Goodall, concludes: “Mortgage lending levels are rising, chiefly because mortgage rates are currently at record lows, and both first time buyers and existing homeowners are taking the opportunity to lock in a good fixed or variable rate while they still can. The economic and political landscape is dampening suggestions we may see a base rate rise soon, but support for normalisation of monetary policy is growing. After seven years of rock bottom rates, we could soon see a volte-face from the Bank of England; one that will be felt by mortgage borrowers right across the UK.

“While the residential market is a hive of activity, the buy-to-let market is in a state of steady growth. The recent buy-to-let tax changes and new underwriting criteria have pushed some amateur landlords out of the market, but professional landlords are filling that void at the same pace. Indeed, we may yet see a spike in buy-to-let borrowing ahead of the PRA changes for portfolio landlords in October, as investors make changes to their portfolios before the stricter lending criteria take root.”


Smaller UK mortgage lenders seeing strong growth

Published On: June 21, 2017 at 9:55 am


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The most recent report released by CML shows that small and medium sized mortgage lenders are seeing strong growth. This comes despite the 10 biggest lenders continuing to take up the most business in the market.

In 2015, medium-sized lenders saw strong growth, with a 56% increase in annual lending volumes. In 2016 however, there was a more steady rate of growth experienced by these lenders.

Instead, those classified in the next tier down – between 21-30 by volume of lending – saw improved growth.

Lending Rises

These firms saw volumes increase by 60% in aggregate and include names such as Paragon, Nottingham BS, Tesco Bank and Fleet Mortgages.

The proportion of new lending by the top ten firms remained steady at 84% during 2016. However, there were some considerable movements.

For example, Lloyds Banking Group remained the largest mortgage lender in the UK, but saw a fall in its market share, from 17.3% in 2015 to 15.6% last year.

Santander UK also saw a fall in its market share, from 11.8% to 10.4%. The Royal Bank of Scotland however saw its share rise from 1.8% to 12.9% – a rise to sit at third place in the lending list.

Smaller UK mortgage lenders seeing strong growth

Smaller UK mortgage lenders seeing strong growth

Challenger Headway

One particular trend that has continued for the last couple of years was the rise in challenger banks and specialist lenders making headway in the list. TSB Bank saw the most significant growth, with its market share rising by 0.5%.

Activity for this particular group was significantly up, with Precise Mortgages, Metro Bank, and Fleet Mortgages seeing rises of 54%, 67% and 150% respectively.

Gross overall lending in 2016 amounted to £245bn, up 11% on 2015. This was a slightly higher rate of market growth than the 9% seen in the year before. In addition, there was a corresponding increase in marketplace competition. 60 lenders appeared in the CML table for lending in 2016 – made up of those who lent over £50m- up from 55 in the preceding year.

Homebuyer Activity Dropped in April, but is Up on Last Year

Published On: June 14, 2017 at 8:11 am


Categories: Property News

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Homebuyer activity was down by 14% on a monthly basis in April, but was up by 19% on last year, shows the latest mortgage lending trends report from the Council of Mortgage Lenders (CML).

The data shows that homebuyers borrowed £9.6 billion in April, amounting to 51,200 loans, which is down by 16% on March, but up by 9% on April 2016.

Within this, first time buyers borrowed £4.1 billion – down 16% on March, but up by 8% on April last year. They took out 25,400 loans – 18% less than in the previous month, but 2% more than 2016.

Homebuyer Activity Dropped in April, but is Up on Last Year

Homebuyer Activity Dropped in April, but is Up on Last Year

Meanwhile, home movers borrowed £5.5 billion – down by 11% on March, but up by a significant 28% annually. This equated to 25,700 loans – a drop of 15% on a monthly basis, but up by 17% year-on-year.

Homeowner remortgage activity was down by 16% by value and 18% by volume on March’s figures, the CML found. Compared to April last year, remortgage lending was down by 15% by value and 16% by volume.

Gross buy-to-let lending also saw month-on-month decreases – down by 17% by value and 16% by volume. Compared to last year, the number of loans rose by 1%, while the amount borrowed remained unchanged.

In another set of data – seasonally adjusted figures – the CML found that first time buyer and home mover lending increased by value and remained relatively unchanged by volume compared to March.

Buy-to-let and remortgage activity also stayed fairly similar in April from March.

The proportion of household income used to service capital and interest rates continued to sit near historic lows in April for both first time buyers and home movers, at 17.3% and 17.5% respectively, the report shows.

Affordability metrics for first time buyers saw the average loan size rise from £133,500 in March to £136,500 in April. The average household income also increased, from £40,000 to £40,700. This takes the income multiple to 3.57, from 3.53.

The average amount borrowed by home movers in April grew from £172,400 to £175,500 on a monthly basis, while the typical home mover household income rose between March and April, from £54,100 to £55,200. The income multiple went up to 3.35 as a result, from 3.34.

The Director General of the CML, Paul Smee, comments: “April comparisons are distorted by the weakness last year following the Stamp Duty changes, and the normal seasonal lending surge in March. But the seasonally adjusted picture shows lending relatively unchanged month-on-month across all lending segments.

“Heading into the summer months, we expect the market to remain slightly lopsided. Buy-to-let and home movers may well remain subdued, as they have been for the last six months. But both first time buyer and remortgage lending should maintain momentum on the coattails of the attractive deals available.”

Shaun Church, the Director of mortgage broker Private Finance, continues: “The mortgage market remained relatively subdued in April and, although lending volumes are higher than a year ago, this is in the context of an extremely quiet April 2016 following the changes to Stamp Duty. The figures for April are also skewed somewhat by a seasonal lending surge in March, which the CML acknowledges. One of most significant barriers to increased activity remains the lack of supply and, while this issue persists, the market will struggle to get into gear.

“However, it isn’t all bad news. Considering the huge economic and political uncertainty of the last 12 months, the market’s relative resilience is a testament to its strong foundations. This should continue to support a baseline of activity in the months ahead. Despite the lack of supply, demand from buyers will be supported by appetite for low mortgage rates and an expanding range of products.”

Industry expert suggests buy-to-let lending will fall

Published On: May 18, 2017 at 9:13 am


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A leading industry peer has revealed that he believes gross buy-to-let mortgage lending is likely to fall in the next two years.

However, David Whittaker, of Mortgages for Business, feels the share of lending through limited companies should increase.


Speaking at yesterday’s FSE Manchester event, Mr Whittaker said that 2017 would see a reduction in the £40bn worth of buy-to-let lending completed during 2016.

He predicted that this would also slip further in 2018.

In addition, he forecasted that 8/9% of this lending would be for limited company buy-to-let in 2017- with this anticipated to rise to 20% during 2018.

Mr Whittaker highlighted data from two lenders- Keystone and Paragon- which both indicate an increase in buy-to-let purchase applications from limited companies. In fact, Keystone’s data indicates that during Q4 of 2016, 3 in 4 applications were through a limited company.

Industry expert suggests buy-to-let lending will fall

Industry expert suggests buy-to-let lending will fall

Underwriting Changes

Whittaker has urged both advisers and clients to be ready for the second part of the PRA buy-to-let underwriting changes, which lenders must introduce by the start of October.

‘We will all have to be prepared for much more paperwork,’ Whittaker noted.[1]

There was also a call for an industry debate regarding the appropriate level of reward for advisers, taking into account the increase in work required for buy-to-let transactions.

Mr Whittaker feels that 15% of all vanilla buy-to-let businesses will have moved into the specialist portfolio and complex sectors, where procuration fees are greater.

‘A seismic change is going on and we need a propert debate on this. If they (the lenders) pay us property, they’ll get the work as they want it,’ he stated.[1]



Gross Mortgage Lending Rose by 19% in March

Published On: April 21, 2017 at 9:10 am


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The Council of Mortgage Lenders (CML) estimates that gross mortgage lending rose by 19% in March to reach £21.4 billion.

Gross Mortgage Lending Rose by 19% in March

Gross Mortgage Lending Rose by 19% in March

This is up from February’s lending total of £17.9 billion, but 19% lower than the £26.3 billion lent in March 2016.

This sharp annual decline in lending was expected, however, following last year’s rush to beat the Stamp Duty deadline for additional properties, which came into effect from the beginning of April 2016.

Gross mortgage lending for the first quarter (Q1) of 2017 was therefore an estimated £59.1 billion. This is down by 4% on Q4 2016 and down by 6% on the £63 billion lent in Q1 2016.The Senior Economist at the CML, Mohammad Jamei, comments: “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.

“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. We do not expect any marked effect from the General Election.”

Shaun Church, the Director of Private Finance, also responds to the data: “While mortgage lending picked up last month after February’s lull, the overall picture for Q1 was fairly subdued. The push and pull effect of strong first time buyer and remortgage activity, combined with falling buy-to-let and home mover lending, means the market is struggling to get into gear.

“The relative lack of growth in the mortgage market is not necessarily a negative sign. The fact the market is staying afloat despite last year’s turbulence and yet more uncertainty ahead is testament to its resilience. Buyer demand remains strong, with record low mortgage rates and growing product choice helping to stoke interest.”

He continues: “Mortgage lending is expected to remain steady in the short-term. However, there are hurdles on the horizon that must be addressed if the market is to stay in good health. The deficiency of property supply is contributing to the relative lack of home mover activity, and poses a serious threat to buyer affordability in the long-term.”