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Lenders taking ‘more pragmatic view around affordability’ – MAB

  • 31/07/2019
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Lenders taking ‘more pragmatic view around affordability’ – MAB
Mortgage brokers experienced a steady “tick over” in mortgages arranged during June as many reviewed and repriced downwards to what has been described as "some of the lowest rates seen for some time”.


According to Mortgage Advice Bureau’s National Mortgage Index for the month, indicators for home movers and first-time buyers remained either stable or only marginally changed when compared to May. 

Regarding residential purchases, the average purchase loan saw a month-on-month uptick of 1.3 per cent to £179,173 in June 2019, while the number of applicants who went for fixed-rate products saw a nominal change from 97.1 per cent last year to 97.8 per cent this year.

The typical loan to value (LTV) remained largely unchanged when comparing May’s 71.3 per cent figure to June’s 71.4 per cent. Year-on-year, this was an increase from the previous figure of 69.9 per cent. The average purchase price decreased by 0.3 per cent to £250,857, when compared to the same month last year. 

Residential remortgage values saw a 1.5 per cent drop to £174,389 while typical LTVs again remained virtually stable at 57.3 per cent in comparison with May’s 57.1 per cent. And 94.8 per cent of remortgage applicants opted for fixed rate products, steady from May’s figure and a slight increase from last year’s 93.5 per cent.


Buy-to-let loans down

In the buy-to-let market, the average purchase loan saw a year-on-year decrease of 3.9 per cent to £125,882 while the applicants who chose fixed rate products stood at 96.1 per cent, an increase from last year’s 95.9 per cent. The average purchase price increased by 0.8 per cent month-on-month to £178,333 but year-on-year, this was a 9.5 per cent decrease.  

The average purchase loan for first-time buyers rose by 1.53 per cent to £161,123 when compared to May which was also a 2.49 per cent increase on last June’s average of £157,104. The number of applicants that opted for fixed rate products fell slightly from 99.5 per cent to 99.1 per cent compared to May, a slight increase from the previous June’s 98.7 per cent. 

The average purchase price rose by 1.32 per cent during the month to £216,561. 

All regions saw an increase in average purchase loan except the East of England, Greater London and the South West which recorded monthly declines of 1.34 per cent, 1.27 per cent and 0.1 per cent respectively. 


Pragmatic view on affordability

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “As has been the case for the past 12 months or more, the regionally diverse picture continued in June, with the East and West Midlands, Scotland, Wales, Yorkshire and the Humber and the North still seeing purchase loan sizes increased on the previous month.” 

He went on to say it was a “slightly different picture” within the M25 as many areas in London continued to be suffering from “Brexit fatigue”, and a “continuing downwards pressure on prices”.

Murphy said: “Anecdotally our brokers would suggest that there is an encouraging level of activity, particularly from first-time buyers taking advantage of softer market conditions in order to negotiate on their purchase.  

“Outside of the city, conditions appear to be starting to move a little, as there was a marginal but positive change in terms of average purchase loan size in the South East over the last month, suggesting that those who have decided to proceed with their purchase are paying at or close to asking prices, probably due to lack of stock meaning that vendors are holding out and being less open to negotiation.”

He added: “Across the month, many lenders reviewed their rates and repriced downwards, providing those who were moving or remortgaging with access to some of the lowest rates seen for some time.

“What’s also become more apparent is a move by many lenders to take a more pragmatic view around affordability where it’s prudent to do so, sending a clear message to the would-be borrowers that conditions continue to be favourable.”



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