Posts with tag: Mortgage lending

Mortgage Approvals Up In December

Published On: February 1, 2016 at 11:58 am

Author:

Categories: Finance News

Tags: ,,,,

The latest Bank of England Money and Credit report has indicated that mortgage approvals were up in December.

Mortgage approvals totalled 70,837 during the month, slightly higher than the 70,410 recorded during November. In addition, this figure was higher than the average of 69,462 over the last six months.

Improving

Further data from the investigation indicates that net mortgage lending fell from £3.9bn in November to £3.2bn during December.

The total number of approvals for remortgaging also went up from 39,161 to 41,708 in the last month of 2015. This was higher than the average of 39,540 recorded over the latter half of 2015.

Total lending to individuals went up by £4.4bn in December, in comparison to £5.3bn in November and £4.6bn over the six month period.

‘Mortgage lending in December reflected some of the rejuvenated confidence radiating from buyers,’ noted Peter Rollings. ‘After the Autumn Statement extensions to Help to Buy and the rock-bottom base rate lasting out the year, first-time buyers were feeling decisive and this was mirrored by a clear upswing in house purchase approvals from November to December. This energy has definitely been carried over into 2016 and January has already seen an impressive influx of motivated buyers, eager to progress up the property ladder.’[1]

Mortgage Approvals Up In December

Mortgage Approvals Up In December

Momentum

Mr Rollings feels that, ‘2015 was also the year of remortgaging for many existing homeowners-and his momentum is showing no signs of dissipating while cheaper fixed-rate mortgages remain available.’ He notes that, ‘in coming months, we can expect strong buy-to-let lending, as the April introduction of higher stamp duty for second homes gives a new sense of urgency for those looking to invest in property or expand their existing portfolio.’[1]

Brian Murphy, Head of Lending at Mortgage Advice Bureau also said, ‘mortgage approvals reached a near two-year high in December, rounding off a successful year for borrowers. Existing homeowners were the frontrunners in this growth, with the number of remortgage approvals rising by more than a quarter since December 2014.’[1]

Murphy also noted that, ‘borrowers benefited from rock-bottom mortgage rates throughout 2015 and our data shows that rates continued to fall across all fixed-rate products in December. Growing numbers of homeowners are wising up to the fact that it pays to remortgage, particularly if moving from a poor value standard of variable rate. Borrowers who are comfortable with a long-term commitment can take advantage of today’s rates by locking into a fixed product, avoiding higher mortgage bills when an interest rate rise eventually kicks in.’[1]

[1] http://www.propertyreporter.co.uk/finance/mortgage-approvals-up-in-december-says-boe.html

Mortgage lending at seven-year high-reaction

Published On: January 21, 2016 at 2:18 pm

Author:

Categories: Finance News

Tags: ,,,,

New research from the Council of Mortgage Lenders (CML) suggests that gross mortgage lending reached £19.9bn in December 2015.

This was a 3% month-on-month dip on the £20.5bn recorded in November, but was a huge 23% greater than the £16.2bn in December 2014.

Seven-year high

The estimated total of gross lending in 2015 is £220.3bn, an 8% increase on the £203.3bn in 2014 and the largest annual gross lending figure since 2008.

In the final quarter of last year, gross mortgage lending totalled £62.3bn, a 1% increase on quarter three and a 23% rise from the final quarter of 2014.

‘House purchase lending has been rejuvenated over the past year and with the second half of 2015 looking stronger than the first in lending terms, the trend looks positive,’ noted Richard Sexton, director of e.surv charterted surveyors. ‘Small-deposit lending has been transformed by a renewed enthusiasm to help first-time buyers cross the threshold of homeownership, as evidenced by the number of higher LTV products available.’[1]

‘Supply issues have become more of a factor in some areas as we head towards the turn of the year, as both growing demand and house prices finally get the attention they deserve from the Government but limited choice of affordable homes is certainly proving challenge to some buyers. Alongside this obstacle, higher stamp duty changes are finally making their mark upon the top end of the market, Sexton added.[1]

Better than expected

John Phillips, group operations director of Spicerhaart and Just Mortgages noted, ‘in July last year, the CML revised its forecast of gross mortgage lending in 2015 to £209bn from £222bn. However, the latest figures show the total for 2015 was in fact £220.3bn, the highest figure since 2008. The total lending figure is significantly higher than the CML’s previous estimation.’[1]

‘It is promising to see that gross mortgage lending increased by eight per cent last year and the underlying picture is one of modest recovery. The level of demand is likely to be a result of low inflation, strong wage growth and competitive mortgage deals, but there is still an element of uncertainty as demand continues to outstrip supply,’ he continued.[1]

Shaky

Brian Murphy, Head of Lending of the Mortgage Advice Bureau, believes, ‘as well as new entrants to the market, activity has also been stoked by homeowners cashing in on the rising value of their home to climb to the next rung of the property ladder. According to HMRC, housing transactions reached a near two-year high in December.’[1]

Mortgage lending at seven-year high-reaction

Mortgage lending at seven-year high-reaction

Murphy believes however that, ‘this growth is being built on shaky foundations.’ He said, ‘with scarce new homes being brought into the market, housing transactions are largely dependent on homeowners moving and selling their homes. Property turnover has slowed significantly in recent years and this is an unsustainable path for a housing market which urgently needs an increase in the construction of new homes.’[1]

Impressive

Peter Rollings, CEO of Marsh & Parsons, believes the, ‘steady build-up of activity and buyer confidence is even more impressive when you consider some of the adverse changes the housing market has had to stomach over the past twelve months. While the shakeup of stamp duty was indeed a welcome tonic for many first-time buyers and those purchasing property at the lower bands, it has been harder to digest at the middle and top-end, where the increased levy is particularly onerous.’[1]

‘With an additional 3% of stamp duty coming into effect for second homeowners in April, 2016 may well see an opposite trend- and a growth spurt in the early stages of this year that could then taper off in the short-term while the market retunes,’ he continued.[1]

Henry Woodcock, Principle Mortgage Consultant at IRESS, agrees, stating, ‘we expect 2016 to continue in the same light initially, although regulatory change may take its toll eventually. Demand will be bolstered by fast movement in the buy-to-let market ahead of April’s deadline and with a rise in interest rates near enough ruled out for 2016, affordable finance will remain in place for borrowers and prospective buyers.’[1]

[1] http://www.propertyreporter.co.uk/finance/gross-mortgage-lending-reaches-seven-year-high.html

Bank of England Stress Tests Results Revealed

Published On: December 2, 2015 at 9:14 am

Author:

Categories: Finance News

Tags: ,,,,,

Bank of England Stress Tests Results Revealed

Bank of England Stress Tests Results Revealed

The Bank of England (BoE) has revealed the results of its stress testing on the UK banking system. It plans to take action to cool the buy-to-let sector, as the market continues to grow.

The BoE has also informed UK banks that they could be forced to hold up to £10 billion of capital ahead of a potential economic downturn.

The stress tests were designed to measure how banks would deal with another financial crisis. The BoE reports that Standard Chartered and the Royal Bank of Scotland (RBS) are in the weakest financial positions.

It believes that both would have been unable to endure a shock to the financial system had they not already taken action to strengthen their financial position over the year.

For months, the BoE has raised concerns over the buy-to-let mortgage market. Although it has not taken immediate action to cool this sector, it announced that it is reviewing the lending criteria used by firms and is “ready to take action”.

It will also observe the impact of the extra 3% Stamp Duty imposed on buy-to-let landlords, as announced by Chancellor George Osborne in last week’s Autumn Statement.

The buy-to-let sector has experienced “rapid growth” recently, with lending rising 10% in the first nine months of 2015.

It is expected that changes to landlord taxes, including the reduction in buy-to-let mortgage interest tax relief from April 2017, will cause some investors to leave the market altogether or sell some of their properties. The additional Stamp Duty may also cool the market.

Read the Bank’s complete stress tests results here: http://www.bankofengland.co.uk/financialstability/Documents/fpc/results011215.pd

How do you think the buy-to-let sector will change in the short term and further into the future?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Lending Up 17% Over the Year

Published On: December 1, 2015 at 10:00 am

Author:

Categories: Finance News

Tags: ,,,,

The amount of mortgage approvals increased to 69,630 in October, up slightly from 69,012 in September, according to the Bank of England (BoE).

October’s number is also higher than the 68,099 average recorded over the past six months.

Mortgage Lending Up 17% Over the Year

Mortgage Lending Up 17% Over the Year

The value of new mortgage approvals reached £12.2 billion. Analysts had predicted 70,000 mortgage approvals for October, but the slightly lower figure was still 17.2% up on October 2014, from 59,423.

Chief Economist at IHS Global Insight, Howard Archer, says mortgage values are rising as house prices continue to increase.

He continues: “While housing market activity has clearly picked up appreciably overall during 2015, the slight easing back in mortgage approvals for house purchases from August’s peak levels could possibly reflect housing market activity being constrained by a shortage of properties on the market.

“It is also evident that mortgage activity has been lifted in recent months by people looking to tie in attractive mortgage interest rates before interest rates start to rise.”1

The amount of remortgaging approvals dropped to 39,629, from around 41,000 in September. However, October’s figure still sits ahead of the six-month average of 38,430.

Total lending to individuals grew by £4.8 billion in October, higher than the average monthly increase of £4.1 billion for the last six months.

CEO of Marsh & Parsons, Peter Rollings, comments on the BoE’s data: “Lending has rebounded after September’s downward blip and mortgage approvals have leaped an impressive 17% year-on-year.

“All the vitals are looking strong, and remortgaging and locking into long-term deals will still very much be the name of the game for many existing homeowners awaiting potential interest rate movement in 2016.

“These figures only look at October, and George Osborne’s package of housing announcements in the Autumn Statement last week will have keyed up a new wave of first time buyers eager to get their foot in the door.

“We may also see a winter flurry of buy-to-let borrowing before April’s Stamp Duty shake-up, as landlords seek to invest before the additional charge is levied on second homes.

“The big question as we enter the New Year is whether the supply of homes will match the increasing demand that’s clearly evident in the mortgage market.”2

In a separate study, the National Association of Estate Agents (NAEA) found that house sales to first time buyers accounted for 31% of sales in October, the highest proportion since August 2009.

It also reported that inventory increased by 16% month-on-month, up from 37 properties per branch to 43. However, it said that demand fell for the fourth consecutive month.

The NAEA revealed that there was an average of nine sales per estate agent branch in October.

1 http://www.cityam.com/229859/mortgage-lending-rose-in-october-according-to-the-latest-bank-of-england-credit-report 

2 http://www.propertyindustryeye.com/mortgage-approvals-for-house-purchase-up-17-in-a-year-says-bank/

 

Paragon Reports Buy-to-Let Lending Up 102%

Published On: November 26, 2015 at 3:44 pm

Author:

Categories: Finance News

Tags: ,,,

Paragon Reports Buy-to-Let Lending Up 102%

Paragon Reports Buy-to-Let Lending Up 102%

The parent firm of specialist lender Paragon Mortgages, The Paragon Group of Companies, has revealed its results for the year ending 30th September 2015.

The firm reported a 10.2% rise in underlying profit for the year, hitting £134.7m, from £122.2m in 2014.

Over the last 12 months, Paragon experienced a huge increase in activity, with buy-to-let lending reaching £1.33 billion, equivalent to 102% growth over the year, from £656.6m in 2014.

Its pipeline of new applications further highlights the increase in business. On 30th September, it stood at £713.7m, up by 72.1% on the same period last year.

Director of Mortgages at Paragon, John Heron, comments: “Access to retail markets through Paragon Bank has provided the group with a material diversification of funding. This has helped facilitate a step change in buy-to-let lending, driven by a significant broadening of our product range and a more consistently competitive position for both large-scale professional landlords and smaller scale property investors.

“It has been a fantastic year for the group overall and with our acquisition of Five Arrows Leasing through Paragon Bank, there will be more exciting opportunities to come.”1

Paragon’s figures indicate that landlords are still confident in the buy-to-let sector, despite a series of changes due for introduction in the near future.

Managing Director of Nova Financial, Paul Mahoney, has also “witnessed an increase in buy-to-let property investments” recently.

He continues: “Although the sector has endured some challenging changes on behalf of the Chancellor of the Exchequer, there is no disputing the returns that geared buy-to-let property investments have provided over the past 20 years; nearly tripling that of the FTSE all share index.

“With changes reducing the tax deductibility of mortgage interest and increasing Stamp Duty Land Tax, some may be a bit concerned regarding the impact.”

But Mahoney isn’t too worried: “Overall, the simple law of economics; supply (severe lack thereof) versus demand (increasingly strong) will prevail and property will continue to be a sound investment.”

Will you continue investing in property, or is your time as a landlord coming to an end?

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/new-buy-to-let-lending-up-102-at-paragon

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Lending Continued to Increase in October

Published On: November 20, 2015 at 9:24 am

Author:

Categories: Finance News

Tags: ,,,

Mortgage Lending Continued to Increase in October

Mortgage Lending Continued to Increase in October

The Council of Mortgage Lenders (CML) reports that gross mortgage lending hit £21.8 billion in October, an 8% rise on September’s total lending of £20.1 billion.

In addition to the monthly increase, the CML found that lending grew by 19% annually, from £18.4 billion in October last year. This is the highest monthly figure since gross lending reached £23.6 billion in July 2008.

However, the group warns that market activity only has “modest” potential for further improvement, due to the shortage of properties coming onto the market.

Chief Economist at the CML, Bob Pannell, says: “As lending in the regulated mortgage space picked up over the summer months, the pace of recovery has improved. This looks set to continue over the closing months of the year with the factors helping support this recovery continuing to be: low inflation, strong wage growth, an improving labour market and competitive mortgage deals.

“As a result, lending this year is likely to exceed our forecast of £209 billion, though affordability pressures will limit business volumes for first time buyers and movers, meaning that we think the market has only modest further upside potential over the short term.”1

1 https://www.cml.org.uk/news/press-releases/gross-mortgage-lending-continues-to-grow-in-october/