Posts with tag: remortgaging

Mortgage Lending Rose for All Borrowers in May, Finds CML

Published On: July 13, 2017 at 8:18 am


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Mortgage lending rose for all borrowers, including first time buyers and buy-to-let landlords, in May, shows the latest UK Finance data from the Council of Mortgage Lenders (CML).

Non-seasonally adjusted figures

On a non-seasonally adjusted basis, homebuyers borrowed £10.8 billion in May – up by 10% on April and 16% on an annual basis. This equated to 58,400 loans – up by 12% on the previous month and 10% on May 2016.

Within this, first time buyers borrowed £4.7 billion, which was up by 12% both on a monthly and annual basis. They took out 29,200 loans – up by 13% month-on-month and by 8% on May last year.

Home movers borrowed £6.2 billion – up by 11% on April and 22% year-on-year. This equated to 29,200 loans, which was up by 11% on a monthly basis and 13% compared with the previous year.

Homeowner remortgage activity was up by 10% by value and 9% by volume on April’s figures. Compared to May 2016, remortgage lending rose by 12% by value and 7% by volume.

Mortgage Lending Rose for All Borrowers in May, Finds CML

Mortgage Lending Rose for All Borrowers in May, Finds CML

Gross buy-to-let lending totalled £2.9 billion in May – up by 16% on April and 12% on May last year. This equated to 19,100 loans – a 16% increase on the previous month and 15% on a year ago.

The Head of Mortgages at UK Finance, Paul Smee, comments: “The apparent strong growth in mortgage lending in May might flatter to deceive. The relative weakness in lending last May, following the Stamp Duty changes, makes comparisons misleading. The seasonally adjusted data shows a less buoyant lending picture, with home buying activity remaining relatively unchanged month-on-month and remortgage lending gradually decreasing each month since January.

“In the summer months, we expect home buying activity to continue, with an even split between first time buyers and home movers, but in greater numbers than in the winter months; we expect buy-to-let to remain subdued compared to its recent 2015 peak.”

Seasonally adjusted data

On a seasonally adjusted basis, lending to first time buyers and home movers declined by value and volume in May compared with April, but rose year-on-year.

Buy-to-let and remortgage activity remained relatively unchanged in May on a monthly basis.

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

Affordability metrics for first time buyers saw the average loan size increase from £136,000 in April to £137,000 in May. The typical household income dropped, however, from £40,700 to £40,500. This meant that the income multiple went up, from 2.57 to 3.59.

The average amount borrowed by home movers in the UK increased from £176,500 to £177,000 on a monthly basis, while the typical home mover household income fell from £55,200 to £54,900. The income multiple for the average home mover went up, from 3.35 to 3.38.

Last month, the CML released a report into why there is a 400,000 deficit in housing transactions in the UK compared to pre-financial crisis levels. The report found that a decline in home movers was the predominant cause for the dip and explored the reasons why this was the case. The full report can be accessed here:

During May, buy-to-let activity was driven by remortgage lending, which accounted for over two thirds of total lending. The number of loans for buy-to-let property purchase advanced in May remained low compared to activity seen before the change on Stamp Duty introduced last April.

The Sales Director of OneSavings Bank, Adrian Moloney, responds to the latest figures: “It’s steady as she goes for total buy-to-let lending. Purchase demand has been affected by a raft of recent tax and regulatory changes, which came into play this year, discouraging some amateur landlords. However, remortgaging activity is buoyant and its popularity is unlikely to wane in the face of landlords’ growing tax burdens, while many can still capitalise on record low interest rates to reduce their outgoings.

“As the industry looks ahead to PRA II [Prudential Regulation Authority Phase 2], we may see somewhat of a surge in activity, as investors look to complete deals before further changes come into play for portfolio landlords.”

Ishaan Malhi, the Founder and CEO of online mortgage broker Trussle, also comments: “While the housing market has been fairly subdued in recent months, remortgaging activity has remained resilient, thanks to the continued availability of attractive deals, which are encouraging more people to switch.

“This market has a far greater capacity than its current operating levels, as there are two million people in the UK unnecessarily sitting on Standard Variable Rate mortgages; likely to be paying far more interest than they would on the best market rates. If we’re to see remortgaging numbers rise further, as they should, more homeowners need to proactively manage their loan and switch to a better deal when their initial term is coming to an end.”

And finally, the Director of mortgage broker Private Finance, Shaun Church, adds: “Although lending picked up in May, the market remains subdued. The lack of available housing continues to limit lending volumes and, while supply-side issues persist, we are unlikely to see a significant increase in lending. A sluggish remortgage market has also contributed to disappointing overall figures, with the CML reporting that, on a seasonally adjusted basis, lending for remortgage has fallen every month since January.

“There are some clear positives to be taken from these figures, however. Lending remains stable in spite of wider political and economic uncertainty, suggesting the market has robust foundations. Demand from buyers continues to be supported by low mortgage rates and a growing number of products.”

Gross Mortgage Borrowing up by 9% in May

Published On: June 26, 2017 at 9:14 am


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Gross mortgage borrowing in May totalled £13.3 billion – much in line with recent months and 9% higher than a year before, show the latest high street banking figures from the British Banking Association (BBA).

Gross Mortgage Borrowing up by 9% in May

Gross Mortgage Borrowing up by 9% in May

Net mortgage borrowing in May was 2.4% higher than a year ago.

House purchase approval numbers of 40,347 in May were 3.3% lower than in May last year, and slightly down on the monthly average of 41,923 over the past six months.

Remortgaging approval numbers of 24,248 were 10% lower than in 2016, and down on the monthly average of 26,494 seen over the previous six months.

Other advances approved were 4.8% higher by number than in May last year.

The BBA’s latest data also shows that consumer credit growth was 5.1% in May, compared with 6.4% in the previous month.

This decline was driven by weaker growth in personal loans and overdrafts, with annual growth dropping from 6.3% to 4.8%, while growth in credit card borrowing also slowed, from 6.4% to 5.5%, reflecting weaker retail sales volumes in May.

The Managing Director of Retail Banking at the BBA, Eric Leenders, comments: “This month’s figures show that, in the run up to the General Election, credit growth in personal loans, cards and overdrafts has slowed, which was reflected in lower spending; with increased household costs affecting growth in deposits and saving.

“Businesses appear to be weighing up their options before raising finance to fund projects or developments. After a long period of subdued company borrowing, overall growth is starting to stabilise at a modest rate.”

The complete figures and analysis from the high street banks for May 2017 can be found on the BBA’s website here:

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Mortgage Accessibility has hit a Three-Year High

Published On: April 3, 2017 at 8:57 am


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Mortgage accessibility has hit a three-year high, as brokers report encountering fewer difficulties when sourcing mortgages for clients than at any point since the introduction of the Mortgage Market Review (MMR) in April 2014, according to a new report from the Intermediary Mortgage Lenders Association (IMLA).

Almost a third (30%) of mortgage brokers reported that they encountered no problem sourcing a mortgage for any type of client in the second half of 2016 – up from 26% in the first half of the year and double the rate recorded a year earlier (15%).

This increase in mortgage accessibility is a clear reflection of improving lending conditions and a sign of the continually strengthening relationship between mortgage lenders and brokers.

Brokers also reported an uptick in successfully sourcing mortgages for a variety of different groups of borrowers. The rate of brokers who said they were unable to source a mortgage for first time buyers dropped from 29% in the first half of 2016 to 16% in the second half of the year, while the proportion who were unable to source a mortgage for standard-status borrowers also fell, from 26% to 15% over the same period.

Mortgage Accessibility has hit a Three-Year High

Mortgage Accessibility has hit a Three-Year High

Softening conditions were also reported for borrowers who sit outside of the mainstream mortgage market. The rate of brokers who were unable to secure a mortgage for borrowers who are self-employed or have irregular incomes decreased from 50% in the first half of the year to 25% in the second half, while the rate for those unable to source mortgages for interest-only borrowers dropped from 52% to 31%.

Furthermore, there was also a substantial decline in the rate of brokers who were unable to source a mortgage for borrowers looking for loans lasting into retirement, which fell from 43% to 29%.

The increase in brokers successfully sourcing mortgages for a greater proportion of clients is set against a backdrop of decreasing average mortgage rates. The Bank of England (BoE) reported that the average two-year fixed rate mortgage at 75% loan-to-value (LTV) fell by 45 basis points, from 1.90% to 1.45% between December 2015 and December 2016 – enhancing consumers’ affordability.

The Executive Director of the IMLA, Peter Williams, comments: “It is hugely encouraging to see a greater number of brokers are reporting that they are successfully arranging mortgages for a wide variety of clients. Over the past few years, regulations like the MMR have raised the bar in terms of borrowers’ requirements, which some predicted would leave many borrowers locked out of the market. This new regulatory regime has made the intermediary channel more important than ever, and brokers are clearly doing a great job of helping people get a foot on the housing ladder.

“House prices have been growing faster than incomes over the past few years, which has challenged affordability. This issue has been particularly acute among first time buyers, which means the fact that just 16% of brokers reported they were unable to source a mortgage for someone in this group over the six months is very positive news. Low mortgage rates have continued to support borrowers’ affordability by reducing monthly payments.”

According to the report, both lenders and brokers alike considered the remortgage market as having the best prospects for growth in 2017, followed by lending to first time buyers.

The remortgage market has grown considerably over the past year, with homeowners looking to tap into growing equity and take advantage of the low rates available to them. According to the latest data from the Council of Mortgage Lenders (CML), homeowner remortgage activity rose by 22% in value (from £5.8 billion to £7.1 billion) and 21% in volume (from 33,200 customers to 40,300) in the 12 months to January 2016.

In terms of mortgage accessibility for the remainder of 2017, lenders viewed borrowing into retirement as the segment of the market with the greatest prospects for growth, with a total of 83% of lenders anticipating that there would be greater availability of mortgage finance to such individuals.

The area of the market chosen to have the greatest increase in availability over 2017 was lending to landlords using a limited company vehicle – in the face of the forthcoming changes to mortgage interest tax relief – with 65% expecting growth potential.

Williams concludes: “The low rate environment is ideal for existing homeowners looking to switch onto a better mortgage deal, and it is no surprise that both lenders and brokers foresee significant increases in this part of the market. While mortgage rates look as though they might have bottomed out, any increases are likely to be minor and will still be conducive to remortgaging activity.

“It is also positive to see that lenders predict greater availability for customers looking to borrow into retirement. This part of the market has been underserved in recent years, and it is vital that this growing demographic has access to the mortgage market.”

Have you seen a change in mortgage accessibility over the past year?

Surge in Remortgages as Borrowers Opt for Longer-Term Fixed Rates

Published On: March 6, 2017 at 11:02 am


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Mortgage brokers have witnessed a surge in remortgages, as borrowers opt for longer-term fixed rates, according to the latest Financial Advisors Confidence Tracking (FACT) Index from Paragon Mortgages.

The fourth quarter (Q4) 2016 report, based on interviews with 201 mortgage intermediaries, reveals that 39% of all mortgages handled by advisors between October and December were remortgages – up by 7% on Q1.

Surge in Remortgages as Borrowers Opt for Longer-Term Fixed Rates

Surge in Remortgages as Borrowers Opt for Longer-Term Fixed Rates

This is also up by 4% on the same period in 2015, with the increase in remortgages reflecting industry statistics from the Council of Mortgage Lenders (CML), which show that there were 34,700 loans for remortgage in December, worth £5.8 billion, representing annual increases of 13% in volume and 14% in value.

Next time buyers are now the second most common type of borrower, having overtaken buy-to-let landlords, accounting for 23% of mortgages handled.

Buy-to-let lending dropped in Q2 following the increase in Stamp Duty, but had recovered by Q4, to 19.3% of all business.

Despite a 2% decline in Q4 2016, first time buyers accounted for 18% of all mortgages handled, remaining stable on Q4 2015.

In terms of interest rate type, there is a clear preference among borrowers for fixed rate mortgages, which accounted for 83% of all lending in Q4 2016, having increased year-on-year since 2010.

Tracker mortgages remain a distant second, at 14%, representing little change over the course of 2016.

Initial fixed or tracker periods of two years are still the most popular products, making up 53% of all cases in Q4 2016 – up by 5% on the same period in 2015. Longer-term products of more than two years accounted for 46% of all cases, with five-year fixes the second most popular product, with 33% of all business.

Unsurprisingly, capital repayment mortgages are the most common mortgage type, accounting for 80% of all products in Q4 2016. This represents a decrease on the previous quarter, but a rise on an annual basis, continuing a slow growth in share dating back to 2007.

Since interest-only lending was scaled back and stricter affordability rules imposed in 2009, the proportion of interest-only mortgages dropped to as low as 14%, and has since remained stable. Despite a slight rise in Q4 2016, interest-only mortgages still account for less than 20% of all cases.

The Managing Director of Paragon Mortgages, John Heron, comments: “Our survey data shows increased levels of activity over 2016, driven particularly by borrowers remortgaging to better rates. These are as likely to be longer-term fixes as they are short-term deals, which bodes well for customer resilience in an uncertain market.

“Buy-to-let had a very strong start to the year, with customers looking to beat the Stamp Duty deadline. There was an inevitable decline in lending in Q2, but volumes have slowly improved as landlords have developed their strategies to mitigate higher taxes on rental income.”

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Published On: February 24, 2017 at 10:53 am


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Monthly gross mortgage lending hit a nine-year high in January, despite weak homemover demand, according to lenders.

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Mortgage Lending Hits 9-Year High Despite Weak Homeowner Demand

Figures from the Council of Mortgage Lenders (CML) show that banks lent £18.9 billion in the first month of 2017, down from £20 billion in December but up by 2% year-on-year.

This is the highest lending total for the month of January since the £25.2 billion recorded in 2008.

The Economist for the CML, Mohammad Jamei, says: “Overall mortgage lending continues to hold up pretty well, but we seem to have a twin-track market. Weakness in buy-to-let and homemovers has been offset by an increase in first time buyers and remortgage lending.

“A continuing acute shortage of homes being offered for sale is one aspect of a broken housing market that looks unlikely to resolve in the near term.”

However, Andrew McPhillips, the Chief Economist at Yorkshire Building Society, was less impressed with the data.

He explains: “This annual growth in mortgage lending was most likely driven by an increase in the number of people remortgaging to better rates, offsetting the impact of a fall in property transactions.

“Affordability constraints caused by increasing house prices, the cost of Stamp Duty and rising inflation, are still hindering the market by limiting the number of people who can afford a property. These increasing costs are making homeownership a more distant dream for many.”

He continues: “In order to make homes more affordable, the Government should implement measures to ease pressures for potential buyers and build enough affordable housing and infrastructure to tackle the supply crisis.

“The Government should also consider introducing measures to ease affordability pressures in the short-term, such as by changing Stamp Duty to a seller’s tax rather than a buyer’s tax.”

Do you agree with McPhillips’ calls on the Government following his belief that remortgaging caused such a surge in mortgage lending?

High Level of Remortgaging Driven by Record Low Interest Rates

Published On: February 24, 2017 at 9:25 am


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The high level of remortgaging recorded in January was driven by record low interest rates, believes the British Bankers’ Association (BBA), following its release of the latest High Street Lending Data.

The figures show that consumer borrowing through overdrafts, loans and credit cards rose at an annual rate of 6.7% in January.

High Level of Remortgaging Driven by Record Low Interest Rates

High Level of Remortgaging Driven by Record Low Interest Rates

Gross mortgage borrowing totalled £13.8 billion in January – up by 6.3% on the same period last year.

Remortgaging approvals in January were up by 15.7% on January 2016, an increase that was driven by historically low interest rates.

Net mortgage borrowing rose by 2.4% on an annual basis.

Household borrowing

Gross mortgage borrowing of £13.8 billion in the month of January was 6.3% higher than in January 2016. Net mortgage borrowing was 2.4% higher in January than a year ago, while consumer credit annual growth increased to 6.7% in January, despite weaker retail sales.

Growth continues to be primarily driven by personal loans, as credit card growth slowed for the third consecutive month, reports the BBA.

Mortgage approvals

House purchase approvals, at 44,657, were 2.5% lower than in January last year, but 2.5% higher than in December and above the 2016 monthly average of 41,320.

Remortgaging approvals of 28,862 in January were 1.57% higher than those recorded in January 2016 and, although lower than December’s approval numbers, are still above the 2016 average of 25,987.

Other advances were 15% higher than a year ago and the highest recorded since January 2014.


Annual growth in personal deposits slowed slightly in January, to 4%. Non-financial company deposits rose at an average annual rate of over 8% in 2015, but fell back in 2016 to an average annual rate of 5%. They are currently growing at an annual rate of 3%.

The Managing Director of Retail Banking at the BBA, Eric Leenders, says: “The New Year saw homeowners make the most of historically low interest rates, by taking advantage of competitive remortgage offers. Nearly 29,000 of these deals were approved last month – 16% higher than January last year.”