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BTL slumps to four-year low as higher LTI lending drives mortgage market – FCA

  • 12/09/2017
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BTL slumps to four-year low as higher LTI lending drives mortgage market – FCA
Mortgage lending between April and June was up 3.8% on the previous quarter and 8.1% on the same period last year, according to figures from the Financial Conduct Authority (FCA).

It said £62.7bn was advanced during the second quarter of 2017, taking the total value of all outstanding loans to £1,365.9bn, 1% higher than Q1 and 3.4% higher than the same time last year.

New commitments also increased by 12.5% to £69.1bn from £61.4bn in Q1.

While the share of buy-to-let has decreased to 12.5% during Q2, the lowest percentage since Q3 2013, higher loan-to-income (LTI) lending increased its share of new lending significantly.

Those in the highest LTI brackets for single incomes accounted for 10.8% of new lending, with high LTI joint income lending at 33.4%.

New lending at or over 90% increased by 0.7 percentage points to 4.6% in the quarter.


Purchases increase

The higher LTI increase is consistent with an increase in the share of new lending for purchases and reflects a fall in remortgage activity. The share of first-time buyers rebounded to 22.0% after a dip in the first quarter when the Help to Buy scheme’s mortgage guarantee was ended.

The FCA said the interest rate on new loans has continued to narrow in relation to the base rate, with 61.5% of new advances now a maximum 2% higher than base. New loans at 3%+ have been declining since Q3 2016 and now account for 11.8% of advances.

Arrears are down to 1.18% of total loan balances, the lowest level since the FCA’s statistics series began. The outstanding balance of arrears is now £16.2bn.

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