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Mortgage borrowing rises in November, BoE data shows

Net mortgage borrowing increased from £1.1bn in October 2021 to £3.7bn in November, show new figures from the Bank of England (BoE)

However, November’s figure is £2.9bn below the 12-month average to June and is some way off the £9.1bn of net borrowing seen in September.

October’s low figure was driven, according to the BoE, by borrowing “brought forward to September to take advantage of stamp duty relief before it was completely tapered off”.

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House purchase approvals were largely unchanged in November, at 67,000, with a value of £14.8bn, while the remortgage approval figure increased from 42,000 in October to 44,500 in November, rising in value from £8.8bn to £9.3bn.

“The fact that approvals for remortgaging rose in November shows that there are people that have either given up looking for available property to move to or that are determined to lock into a longer term-fixed rate deal before interest rates rise again,” says Phoebus Software sales manager Richard Pike.

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“This [remortgage] data only captures those moving to another lender and not product transfers, of which there are likely to be many,” adds SPF Private Clients chief executive Mark Harris.

“A significant pick-up in remortgaging is expected this year as the threat of interest rate rises combines with many people coming off existing mortgage deals,” he continues.

The BoE data also shows that the effective interest rate for new mortgages dropped to 1.50 and the rate on outstanding mortgages fell to 2.02% – both a series low.

By Gary Adams

Source: Mortgage Finance Gazette

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Nationwide: Gross mortgage lending up £5.5bn

Gross mortgage lending grew by £5.5bn to £18.2bn in the six months between April and September 2021, up from £12.7bn in H1 2020, according to Nationwide Building Society.

However, its market share fell to 11.4% from 12% in H1 2020.

It lent over £5bn to first-time buyers, supported by its new Helping Hand mortgage and return to 95% loan-to-value (LTV) lending.

As well as this, its deposit market share rose to 9.6% up from 9.4% in April 2021 and current accounts grew to 8.7m up from 8.5m in April this year.

Underlying profit increased to £850m for the period ending 30 September, up from £305m in H1 2020.

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Statutory profit increased to £853m up from £361m in H1 2020, benefiting from a growth in net interest income to £1,706m, a net release of £34m of credit provisions and £133m increase in other income.

And net interest margins improved to 1.24% up from 1.15% in H1 2020.

Joe Garner, chief executive of Nationwide Building Society, said: “Early in the pandemic we made decisions to stand by our members and to protect our financial strength.

“This year we continued to support our members and have delivered a very strong half year performance, with capital reaching an all-time high. As a mutual, profits are retained to invest in the Society for the benefit of its members and wider society over the long
term.

“Over the last six months we have focused on providing highly competitive products for our mortgage and savings members. These have been very popular, resulting in a successful ISA season, increased deposits, higher mortgage lending, and a larger share of the current
account market.

“We continue to focus on providing the high-quality personal and digital service our members expect of us, and have led our peer group on satisfaction for over nine years.

“We have delivered value to members through our member prize draw, the restarting of our current account switching incentive and the launch of a scam checker service.

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“Our success is a testament to the strength of our mutual business model, to the hard work of our colleagues, and to the value we provide to our members.

“Given the level of uncertainty about the future, the strength of our finances gives us freedom to make choices, and confidence in continuing to support our members, colleagues and communities.”

Chris Rhodes, chief financial officer, Nationwide Building Society, added: “During the last six months, the Society has delivered strong performance across our three main product areas of mortgages, savings and current accounts.

“During the pandemic, strong demand for mortgages, coupled with macro-economic uncertainty, led to higher margins on mortgage lending. This resulted in significantly higher income, and a very strong overall financial performance.

“Net interest margin improved, but is unlikely to be sustained at this level in future due to intense competition in the mortgage market.

“We have continued to focus on efficiency and our costs remain flat despite further investment and growth of our business. While the improving economic outlook led us to release some of the credit provisions taken during the pandemic, there still remains
significant economic uncertainty.

“Our balance sheet strength, as evidenced by our very strong CET1 and UK leverage ratios, means we are well positioned for what remains an uncertain period ahead.”

By Jake Carter

Source: Mortgage Introducer

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LMS: Remortgage completions up 108%

The volume of remortgage completions rose by 108% in September, according to the LMS Monthly Remortgage Snapshot.

Instruction volumes also increased, rising by 50% over the same timeframe.

The overall cancellation rate rose by 0.43% to 5% and pipeline cases increased by 7% in last month.

The average monthly payment decrease for those who remortgaged in September was £235.

A total of 45% of borrowers increased their loan size and 50% of those who remortgaged took out a 5-year fixed rate product, which was the most popular product length.

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An estimated 28% of remortgagers’ primary aim when remortgaging was to release equity from their property.

The average loan increase post remortgage was £21,584, whilst the average loan decrease post remortgage was £12,607.

The average remortgage loan amount in London and the South East was £288,939, while the average for the rest of the UK stood at £148,978, putting remortgage loan amounts 48% higher in London and the South East than the rest of the UK.

The longest previous mortgage length was found in the North East at 75.88 months (6.32 years) and the shortest was in East Anglia at 59.92 months (4.99 years), putting the longest previous mortgage term 26.64% longer than the shortest.

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Nick Chadbourne, chief executive of LMS, said: “Remortgage instructions rose by 50% in September as rumours of an interest rate rise loom large, which may impact the cost of mortgages.

“Savvy borrowers nearing the end of their current term, and their brokers, will have anticipated this and have begun to shop around to secure a longer fixed-rate deal to weather any increases in their monthly repayments.

“The number of remortgage completions soared to 108%, as September marked one of the highest numbers of ERC expiries of the year.

“As some lenders will be inundated with cases as a result of the current rate wars, panel managers will have an important role to play in mitigating any mismatch in capacity across the industry, by ensuring that instructions are evenly balanced between firms to maintain service levels.”

By Jake Carter

Source: Mortgage Introducer

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Mortgage borrowing picks up in September, BoE finds

Net mortgage borrowing hit £9.5bn in September, a significant jump from the £4.4bn seen in August, according to new Bank or England (BoE) data.

This increase, says the BoE, “was driven by borrowing ahead of the complete tapering of lower stamp duty from October.”

It is the highest number seen since June 2021’s record of £17.1bn, the bank adds.

Alongside this, gross mortgage lending “increased sharply”, from £20.9bn to £30.7bn.

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Approvals for house purchases, meanwhile, fell on a monthly basis, from 74,200 to 72,600 while the value of this metric ticked downwards from £15.5bn to £15.3bn.

And approvals for remortgages increased slightly, from 40,000 to 41,500, with the value rising from £8bn to £8.4bn.

North London estate agency and former Rics residential chairman Jeremy Leafe says: “[These] numbers come at a particularly interesting time when the high borrowings showed buyers and sellers rushing to take advantage of the stamp duty holiday, whereas still relatively high approvals demonstrate a confidence to move even without the support of the concession.

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“Worries about inflation and mortgage rates, which are even higher since the Budget, do not seem to be reducing activity while demand particularly for family houses continues to comfortably outpace supply.”

And Mark Harris comments: “This is likely to be the last set of numbers from the BoE where the effective interest rate on new mortgages falls as several lenders, including Barclays, HSBC, NatWest and TSB, have all since raised their pricing in anticipation of a base rate rise next week.

“With the BoE hinting at a rate rise, and the Chancellor in his Budget referring to an average rate of inflation of 4% next year, all signs are that the official rate will rise for the first time since March 2020.

“Whether base rate rises or not, mortgage rates have started edging upwards as the markets have already priced in a rate rise, and possibly two or three more by the end of next year.”

By Gary Adams

Source: Mortgage Finance Gazette

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Mortgage Affordability hits 2021 high in September

The average maximum loan size available is up by nearly 10% compared to the start of the year in September – representing a 2021 high, according to the latest analysis from Mortgage Broker Tools (MBT).

Analysis of real cases processed through the MBT research platform found that the maximum loan size available to an average customer was £254,821 in September, compared to £234,224 in January.

This increase was primarily driven by improved options for first-time buyers with the maximum loan size available such a buyer standing at £276,060 in September, up from £230,555 in January.

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Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “It’s a very competitive lender landscape at the moment and that means more options for borrowers. Cutting rates is one way for lenders to get an edge, but it’s not the only way and we’ve seen improved choice at higher LTVs and lenders making changes to their affordability calculators to become more competitive.

“At Mortgage Broker Tools, we’ve also seen the introduction of new ways for first-time buyers to enhance their affordability options, with results that show the benefits of combining an equity loan with a first charge mortgage, and this has certainly helped to boost the average loan size available to this group of customers.

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“The latest MBT Affordability Index shows that even though the maximum loan size available is at its highest point this year, a quarter of cases are still deemed to be unaffordable by lenders, so it’s really important that brokers carry out thorough research amongst as many providers as possible.

“Our residential panel, for example, features 44 lenders, which is nearly a third more than its nearest competitor. This difference in panel size makes a tangible difference to how much a client is able to borrow – in fact, we have calculated that by researching the additional lenders we offer, an average client would be able to borrow an extra £38,000. And this could be the difference in helping a client to achieve their objectives or letting them down.”

Source: Mortgage Introducer

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Mortgage arrears remain low as payment holidays come to an end

Mortgage arrears remain close to historically low levels due to the mitigating effects of payment deferrals and other tailored forbearance, according to the latest figures from UK Finance.

Q2 saw 26,560 homeowner mortgages in early arrears (those between 2.5% and 5% of balance in arrears), down 5% on Q1.

Some 27,910 homeowner mortgages had more significant arrears (10% or more of the outstanding balance), an increase of 630 on the previous quarter.

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210 homeowner mortgaged properties and 230 buy-to-let mortgaged properties were taken into possession in the second quarter of 2021.

Steve Seal said: “While it’s encouraging to see mortgage arrears remain close to historic lows, the picture could look very different in the coming months. Mortgage payment holidays have now come to an end, and with furlough and the Self-Employment Income Support Scheme set to end in September, there’s likely to be more homeowners who will struggle to keep up with mortgage repayments.

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“This may only be short-term for some borrowers, however it is something that could impact their credit profile in the long-run. As a result, many of these customers risk being turned away from highstreet lenders and may not know where else to turn. This is where the specialist lending market has an increasingly important role to play.

“As an industry, it is our responsibility to support this cohort of customers which is only set to grow post-pandemic, signposting them to the options available and highlighting how the specialist market can cater to their unique needs.”

Source: Mortgage Introducer

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Mortgage rates fall as choice rises, according to the latest Moneyfacts report

Continued growth in product choice for borrowers, in addition to rate competition, has led to reductions in overall average fixed rates month-on-month, according to the latest Moneyfacts UK Mortgage Trends Treasury Report data.

Nine months of consecutive increases in mortgage availability has seen total product choice reach its highest level in 16 months, with 4,512 deals on offer.

This is an increase of 269 in the last month alone, and the highest this has been since March 2020, when the figure was 5,222.

This is the first time since June of 2018 that Moneyfacts has recorded availability increasing across all the individual loan-to-value (LTV) tiers.

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Borrowers seeking higher LTV products have seen the largest improvements in choice, particularly at 95%, where the research recorded a jump of 61 products compared to June 2021, while the current total of 253 available deals offers 239 products more than there were this time last year.

For only the second time in the past 12 months, both the average overall 2-year and 5-year fixed rates fell over the course of the month, to 2.55% and 2.78% respectively.

Reducing by 0.04% in both cases, these are the largest monthly reductions recorded for either rate since June 2020.

July 2020 logged record lows of 1.99% and 2.25% for these rates, due to the dearth of available deals fuelling these averages, particularly at the higher-rated, higher-risk top LTV brackets.

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Eleanor Williams, finance expert at Moneyfacts, said: “The level of choice available to those looking for a residential mortgage has risen substantially again between June and July, as volumes rose by 269 new products bringing the total available to over 4,500.

“Over the past six months alone availability has recovered by 1,619 – or 56% – and for the first time in over three years, we tracked improvements in choice across all the LTV brackets this month, great news for borrowers with all levels of equity or deposit.

“Our data shows there is further cause for positivity as both the overall average 2 and 5-year fixed rates have fallen.

“At 2.55% the average 2-year fixed rate is at its lowest since February (2.53%), while the average 5-year rate at 2.78% is the lowest since April (2.77%).

“Although the 2-year overall rate is 0.06% above its equivalent rate from a pre-pandemic July 2019, the 5-year overall average rate is 0.07% below its equivalent two years on (2.85%) and could indicate lenders are moving to price longer-term fixed rates more competitively, perhaps reflecting a shift in borrower focus to locking in for stability in these uncertain times.

“First-time buyers and those considering a mortgage at higher LTVs are amongst those to benefit the most from rate cuts, with the average 2 and 5-year fixed rates at 90% LTV falling by 0.15% and 0.08% respectively, while at 95% LTV reducing by 0.09% and 0.06%, respectively, but equally it is impossible to ignore the growing ranks of providers offering sub-1% deals to tempt borrowers with larger levels of equity or deposit as well.

“According to the latest Halifax House Price Index, there was a 0.5% drop in property prices, likely linked to the stamp duty holiday tapering off, but this in no way detracts from the fact that overall prices are up approximately 8.8% on a yearly basis.

“Demand for the very limited supply of property could remain high, as the appetite to either get onto the property ladder or for larger properties with home offices and outdoor space continues, and these borrowers could be enticed by the possible savings lower mortgage rates may bring them.

“Competition is evident across the residential mortgage sector, but there is no guarantee that rates will continue to fall, or for how long these record-low deals may be available for, therefore seeking advice to assess the best true cost deal for their own circumstances would be a wise move by any prospective borrower.”

By Jake Carter

Source: Mortgage Introducer

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BoE: Mortgage borrowing rises to £6.6bn in May

Net mortgage borrowing climbed in May to £6.6 billion from £3 billion in April, the latest Bank of England (BoE) data has revealed.

Despite this significant leap, the BoE said borrowing still remained below the record figure of £11.4 billion achieved in March of this year.

Mortgage approvals for house purchases inched up slightly in May to 87,500 from 86,900 in April. This was also lower than the peak of 103,200 in November 2020.

Today’s data also revealed approvals for remortgage – which only captured remortgaging with a different lender – increased slightly to 34,800 in May, from 33,400 in April. This remains low compared to the months running up to February 2020, the BoE said.

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The ‘effective’ rate – the actual interest rate paid – on newly drawn mortgages went up by two basis points to 1.90% in May.

The BoE said this was marginally above the rate in January 2020 (1.85%), and compared to a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained unchanged at a series low of 2.07%.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “It’s not surprising that the mortgage market is continuing to perform well, with homebuyers keen to move before the first change to the Stamp Duty holiday at the end of June.

“There’s also a lot of competition amongst lenders, with mortgage rates nearing record lows in some cases – this is of course great news for borrowers”

He added: “We expect figures for June to be even higher, and for activity to return to more normal levels after the threshold for Stamp Duty has been lowered to £250,000.”

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Meanwhile, Karen Noye said these figures demonstrated how buyers were ‘soaking up the last of the favourable stamp duty conditions before tapering began’.

“Once the holiday has fully come to an end in October we may enter into a market where buyers choose to wait and see and the number of people looking to buy significantly reduces,” she said.

But she warned the end of furlough and other schemes could change the landscape going forward.

“For some time, the housing market has been propped up by government schemes and initiatives like the stamp duty holiday and then 95% mortgage scheme, which has encouraged people to borrow at times where they may have chosen to sit on their hands.

“Once the government’s helping hand has been withdrawn, we may see people opt for a wait and see approach and mortgage borrowing could plummet.

“Similarly, part of the reason the market has been so hot as of recent is due to people wanting to move to properties with gardens or home offices in light of the restrictions on movement and working.

“As things get back to normal this frenzy may start to fade and people feel happier to stay put as cities open back up and outside space is lower on the agenda.”

By Kate Saines

Source: Mortgage Finance Gazette

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Value of UK Mortgages Climbs 3.6% Between Q1 2020 and Q1 2021

The outstanding value of all residential mortgage loans in the UK stood 3.6 per cent higher at the end of Q1 2021 than at the same point the year before, according to new Bank of England figures.

The figures, released yesterday, also showed that the value of new mortgage commitments was 15 per cent higher than in the same quarter the year before.

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However, the value of outstanding balances with some arrears increased by 5.1 per cent over the quarter to £15 billion, and now accounts for 0.96 per cent of outstanding mortgage balances.

Commenting on the figures, Paul Stockwell, chief commercial offer at Gatehouse Bank, said: “Buyers’ insatiable appetite to move home has meant the value of new mortgages started the year at highs not seen since before the 2008/09 financial crash. There has been frenzied activity in the market with movers searching for larger homes and more outdoor space, while the extension of the stamp duty discount to the end of June added more fuel to the fire in the first quarter of this year.”

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He added: “The biggest stamp duty savings run out in just a few weeks’ time, yet measures from other housing indices suggest the frantic competition for property continues unabated. While lending may fall from these current highs, we still expect it to be an incredibly busy summer for the housing market.”

BY PETE CARVILL

Source: Property Wire

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Lenders hand out most mortgages to first-time buyers in nearly 20 years

Banks and building societies handed out more mortgages to first-time buyers in March than any time since 2002.

Across the UK, 42,330 mortgages were issued to first-time buyers in March, marking the highest monthly total since December 2002 when 44,000 were advanced, according to trade association UK Finance.

Many people who would have taken their first step on the property ladder last year may have put their plans on pause due to the coronavirus pandemic, with the market having been effectively shut for part of 2020.

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Last peak was in July 2002

A total of 58,810 mortgages were advanced in March to home movers, the highest figure since August 2007. The peak month for home mover activity was July 2004 when 93,500 mortgages were advanced.

The peak month for lending to first-time buyers on UK Finance’s records was July 2002, with 54,100 loans.

March 2021 was the original deadline for a stamp duty holiday in England and Northern Ireland, but the period has been extended.

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“Since the housing market emerged from its shutdown last spring, we have seen a remarkable recovery in demand, which continued through quarter one 2021,” said Eric Leenders, managing director of personal finance at UK Finance.

“Existing home owners have taken advantage of the stamp duty concessions, with changing working and living patterns encouraging more to use their existing equity, either to move further afield or to fund further housing purchases for themselves or family,” Leenders added.

By Michiel Willems

Source: City AM

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