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Mortgage market displays resilience with August boost

  • 12/10/2017
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Mortgage market displays resilience with August boost
House purchase lending rose in August, beating the previous month and the year-on-year figures, according to UK Finance.

Borrowing by first-time buyers and home movers increased by value and volume. However, there was a decline in both the number of people remortgaging and the value of lending, plus a small decrease in the number of buy-to-let borrowers remortgaging.

First-time buyers borrowed £5.7bn, 16% more than in July and 12% more than in August 2016. They took out 34,400 mortgages, 14% up on the preceding month and 9% more year-on-year.

Home movers borrowed £8.4bn, 18% more than in July and 20% more than in August last year. This equated to 38,500 loans, up 17% on July and 13% on August 2016.

Remortgaging by home owners totalled £6.4bn, 4% less than in July but 8% more than in August 2016. The number of people remortgaging totalled 36,700, down 1% on July but 5% higher than a year ago in the aftermath of the EU Referendum and snap General Election.

Buy-to-let lending totalled £3.1bn, said UK Finance, down 3% on July 2017 and the same as in August last year. This equated to 20,400 mortgages, the same as in July but 4% more than in August last year.

UK Finance’s head of mortgages policy June Deasy said: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in stamp duty.

“Over the last 12 months, the number of people remortaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

The proportion of household income taken up by mortgage payments edged up for first-time buyers (17.5%) but was unchanged for movers (17.6%). Overall, it remains low by historical standards.

The average amount borrowed by a first-time buyer increased from £138,999 in July 2017 to £140,035. There was a smaller proportionate increase in the average first-time buyer household income, and the average income multiple increased from 3.60 to 3.63.

The average amount borrowed by movers increased from £180,000 to £182,750, and their average income multiple increased from 3.38 to 3.40.

In August, remortgaging accounted for more than two-thirds (68%) of buy-to-let lending. This was five per cent lower than in July, but borrowing for house purchase increased by 11%.

Steven Seal, director of sales and distribution for Bluestone Mortgages, said the figures were solid.

“To see an increase in first-time buyer lending year-on-year is an encouraging sign that the market remained open for business over the summer, despite the political uncertainty that has characterised most of 2017.

“Schemes such as the Government’s Help to Buy loan have also helped 81% of first-time buyers onto the property ladder in Q2, and this number looks set to grow.”

He added that the shortage of affordable homes for first-time buyers has caused a ‘bottleneck’ in the market. “However, the positive growth in first-time buyer lending also means we may finally be seeing a rebalancing in supply and demand of affordable property.”


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