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High LTV and LTI lending grow as remorgaging and buy-to-let slide – BoE

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  • 11/09/2018
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High LTV and LTI lending grow as remorgaging and buy-to-let slide – BoE
Mortgage lending grew by more than 6% in the second quarter of 2018 as lenders advanced £66.7bn worth of new loans, according to data from the Bank of England (BoE) and Financial Conduct Authority (FCA).

 

Analysis by the regulators also highlighted the competitiveness of the mortgage market this year.

In Q2 2018, the proportion of mortgage loans at less than 2% above BoE base rate (BBR) continued to increase to 76.2% of the market.

In addition, the percentage of loans extended 4% or more above BBR has decreased to 2.9% and the percentage of loans between 2% and 3% above BBR decreased by 0.19 percentage points.

The £66.7bn total lending was 6.4% up on the same period last year and 6.9% up on the first three months of 2018.

However, the rise in volume was driven by higher loan-to-value (LTV) and loan-to-income (LTI) lending as first-time buyers took a greater role in the market, rising to take 21.4% of new lending.

The share of new lending in the highest LTI brackets in Q2 2018 increased overall compared to last quarter from 43.9% to 45.1% in Q2 2018

There has also been an increase in the proportion of loans above 90% LTV.

 

Increasing house purchases

House purchase loans grew by 1.9 percentage points to 63.0%, driven by an increase in home movers.

Meanwhile, re-mortgaging declined by two percentage points as a proportion of new lending from Q1 2018, accounting for 30.8% of new lending at £20.5bn in Q2.

The share of buy-to-let borrowing returned to 13.1% of new lending, a similar level as last year, after a slight uptick in the first quarter.

 

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