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Mortgage approvals down slightly in May

Mortgage approvals for house purchases, an indicator of future lending, fell back slightly from April to 65,400 in May, the Bank of England’s Money and Credit statistics has found.

Approvals remained broadly in line with the narrow range seen in previous years.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The number of mortgage approvals for house purchase, which indicate at what level future lending will be, fell back slightly in May but remain broadly in line with the narrow range seen in previous years.

“It shows that the mortgage market is trundling along quite steadily with no great shocks either way. This is reassuring as there is plenty of political and economic uncertainty, which is preying on people’s minds and creating a delay when it comes to making big decisions

“Lenders remain keen to lend and several have cut rates in recent weeks, so mortgage rates are likely to remain low for a while yet, further supporting the market.”

Net mortgage borrowing by households fell to £3.1bn in May, the smallest increase since April 2017. However, the annual growth rate for mortgage lending remained stable at 3.2%, and has now been around 3% since late 2016.

John Phillips, operations director at Just Mortgages and Spicerhaart, added: “There is not a huge change here; net mortgage borrowing fell slightly, but the annual growth rate for mortgages has remained stable at 3.2%, which means it has now been steady at around 3% for almost three years.

“Approvals, however, were down for both house purchase and remortgaging, which could suggest that lending will fall over the next few months and growth may slow too.

“There is no doubt that it has been a funny old few years for the mortgage market. Brexit has obviously had – and is still having – an impact, but I don’t think it is the only factor at play.

“For many years now, borrowing costs have been very low, but wages have not been keeping pace with house prices, so while mortgages are affordable, deposits and stamp duty are not.

“Those who may have upsized in the past are now either remortgaging to borrow more and then extending, or just saving the money they would’ve used on stamp duty and investing it into their existing homes.”

Phillips said that if the government wants to get things moving again, it needs to do something about the cost of moving, in particular stamp duty.

He said: “People are simply not prepared to throw thousands of pounds that could be used to invest in a bigger home on stamp duty.

“Back in April, the House of Lords Committee on Intergenerational Fairness and Provision recommended changes to stamp duty because, they said it is ‘seriously distorting the market’ and I think they’re right. Until something is done about the crippling cost of stamp duty, the market will continue to struggle.”

The number of approvals for remortgaging fell in May, to 46,700.

Nick Chadbourne, chief executive of conveyancing solutions provider LMS, added: “Remortgage activity figures from the Bank of England show the market is resilient, buoyed by near record low interest rates and high product expiry rates in Q2 this year.”

“In fact, LMS’ latest remortgage snapshot shows that there was a spike in remortgage activity to 53,624 and almost half of those who remortgaged opted for a 5-year fixed rate deal.

“LMS’ data also shows 65% of borrowers expect an interest rate rise within the next year, so we expect the trend towards long-term fixed rate deals to continue throughout 2019.”

Kevin Roberts, director, Legal & General Mortgage Club, said: “The government’s Help to Buy scheme has improved affordability for first-time buyers, and with mortgage lenders increasingly offering 95% loan-to-value products, they have unparalleled access to the finance they need.

“The low interest rate environment has also encouraged existing homeowners to remortgage onto longer fixed-term products – giving them certainty over their future repayment costs.”

By Michael Lloyd

Source: Mortgage Introducer

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Home purchase mortgage approvals up but remortgaging is down

Gross mortgage lending dropped slightly in May 2019 by 0.4% to £21.9 billion, compared with the same month in 2018, new figures from UK Finance show.

Two thirds of this lending (£14 billion) is by the high street banks and this is 3.5% higher than May 2018.

The number of mortgages for home purchase approved by the main high street banks in May 2019 was 49,683, a rise of 9.1 per cent year-on-year, and the highest level since June 2016.

Approvals for other secured borrowing at high street banks rose by 5.9 per to 9,712 but remortgage approvals fell by 3.7 to 30,579 over the year.

The £11.3 billion of credit card spending in May 2019 was 5.6 per cent higher than the same month in 2018. Repayments have remained in line with credit card spending, showing that consumers are managing their finances effectively overall, says UK Finance.

Personal borrowing through loans from high street banks in May stood at £1.7 billion, which is 9.3 per cent higher than the same month in 2018.

Lending through bank overdrafts was 3.2 per cent lower at £6.3 billion compared to May 2018.

Deposits held in the high street banks’ personal accounts and savings accounts were 1.2% higher year-on-year at £854.3 billion.

Richard Pike, Phoebus Software sales and marketing director, said: “Looking at these latest figures from UK Finance, and the upwards swing in the number of mortgage approvals for house purchase, it appears the market is moving again despite the ongoing political turmoil in the UK.

“The increase in credit card spending is something that we do need to be mindful of, but currently we can also see that consumers are so far keeping up with repayments of their debt.

“One wonders whether credit cards are being used to keep up repayments on other areas as well? We must not only consider levels of debt but future affordability if credit card spending keeps increasing”.

By Joanne Atkin

Source: Mortgage Finance Gazette

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UK property market: Mortgage approvals dip from 26-month April high

The number of residential mortgages approved by banks dipped last month, easing back from a 26-month high in April but remaining above the monthly average.

Seasonally adjusted figures show that banks in Britain approved 42,384 house purchase mortgages in May, falling from roughly 42,900 in April but beating the consensus of 41,000.

The actual number of mortgages for home purchase approved by the main high street banks in May 2019 was also 9.1 per cent higher than in the same month in 2018, marking the highest annual level since June 2016.

According to UK Finance, which released the figures this morning, gross mortgage lending across the residential market in May 2019 was £21.9bn, falling 0.4 per cent compared with the same month in 2018.

“May’s mortgage approvals data support the view that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March. It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” said Howard Archer, chief economic advisor at the EY ITEM Club.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The increase in mortgages for home purchase, rising to the highest level in three years, is hugely encouraging when you consider the political uncertainty which is causing many people to put decisions to move on hold.”

He added: “It suggests a much more resilient market than one might expect, and once a decision is made over Brexit, one way or another, we are likely to see a further uptick in transactions as pent-up demand is released.”

By Sebastian McCarthy

Source: City AM

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Fixed rate mortgages become more popular

Fixed rate mortgage deals are becoming more and more popular as eight in ten mortgage shoppers are considering the option.

This month’s Experian Credit Barometer, out yesterday (June 20), showed May saw 81 per cent of searches directed at fixed rates, compared with 72 per cent in March and 77 per cent in April.

In comparison, interest for variable repayment rates slowed with only 10 per cent searching for a tracker and 9 per cent for a variable mortgage in the month.

Last year, The Bank of England raised interest rates for the first time in 10 years while governor Mark Carney has previously said interest rates were likely to rise twice more over the next three years.

The possibility of rate rises could mean homeowners increasingly value the stability that longer term fixed rate mortgages provide.

The Bank yesterday (June 20) announced it was holding the base rate at 0.75 per cent, which could encourage more savers to lock in the low rates while they can.

Amir Goshtai, managing director of Experian Marketplace & Affinity, said: “People want certainty when it comes to their finances, especially in times of such economic uncertainty.

“Rising popularity in fixed term mortgages and high searches for loans for debt consolidation tell us borrowers are looking for low, fixed monthly payments to effectively manage their outgoings and keep control of their finances.

“Interest rates for mortgages and loans are relatively low so now is a good time for borrowers to shop around and seriously consider locking-in their monthly repayments.”

It emerged in February that the number of fixed rate residential mortgages available has reached a 12-year high, as 5,214 fixed rates were available on the market compared with 4,570 in the previous year.

Daniel White director of White Financial Services said two-year rates have always been a popular choice because they provide “the flexibility of allowing a client to review over a shorter term”.

However, he added it is “the longer term security in a period of uncertainty” that is pushing more mortgage shoppers towards longer term fixed rates.

Jonathan Harris of mortgage broker Anderson Harris, said five-year deals were proving particularly popular at the moment.

He said: “The attraction is they give protection from potential rises for the medium term, without locking the borrower in for too long.”

Providers have also increasingly been introducing 10 year plans in order to meet growing demand for this option.

Research from consumer champion Which out earlier this year showed the number of providers offering such a mortgage had doubled in the year to January, to 14 providers.

For example, Santander was the latest lender to add a long-term fixed rate mortgage to its range with the launch of a ten-year deal in May this year.

By Eveline Vouillemin

Source: FT Adviser

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Home-movers drive mortgage market after a drop in remortgaging

First-time buyers and home mover mortgage lending rose in April, but there was a drop in remortgage business

There were 27,370 new first-time buyer mortgages completed in April 2019, 7.9 per cent more than in the same month in 2018, according to UK Finance.

The trade body, which represents mortgage lenders, also found an increase in home mover mortgages – there were 25,450 completed in April 2019, 6.4 per cent more than in the same month a year earlier.

However, remortgage business fell in April, with an 3.1% drop in borrowers switching their deal compared to a year earlier.

Andrew Montlake, director of mortgage broker, Coreco, said: “Given Help to Buy, the strong jobs market, increased product choice at higher loan-to-values and lower house prices, it’s no surprise first-time buyers were the key driver of activity in April.

“The increase in homemover mortgages also underlines how Brexit indifference trumped Brexit uncertainty in the first quarter of the year.

“During 2019, the whole issue of Brexit has become so surreal that many households are no longer willing to put their real lives on hold for it, all the more so given that interest rates are at rock bottom.”

Buy-to-let holds steady

There were 5,100 new buy-to-let house purchase mortgages completed in April 2019, the same as this time last year, said UK Finance.

There were 14,400 remortgages in the buy-to-let sector, also the same as this time last year.

Montlake added: “What’s interesting is that the impact of recent tax changes on the buy-to-let market appears to have settled down.

“The buy-to-let market is not what it was but has now reached a new equilibrium.”

Written by: Christina Hoghton

Source: Your Money

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Mortgage approvals tick up in April

Mortgage approvals — a leading indicator of mortgage activity and future lending — ticked up in April, according to new data from the Bank of England.

The BoE’s Money and Credit report, published today (May 31), showed the number of mortgage approvals for house purchase rose to about 66,300 in April — up slightly from the 62,559 measured for March.

Mortgage approvals show how many new loans banks have approved and that could be drawn, so capture the early stages of taking out secured lending against a property.

Therefore, they are a key indicator of current market activity and potential future lending.

However the number of approvals for remortgaging was broadly unchanged at around 49,400.

This is a turn in the market, as data released by UK Finance last month showed the number of people getting approved to remortgage increased by 11.1 per cent year-on-year in March and the number of people opting to remortgage is expected to reach a peak later this year.

The bank’s data also showed net mortgage borrowing remained strong for the second month in a row, totalling £4.3bn in April compared with the six-month average of £3.8bn.

The findings showed the annual growth rate of mortgage lending remained unchanged at 3.3 per cent, consistent with the level the market has seen since August last year.

Andrew Montlake, director of mortgage broker, Coreco, said: “Today’s buyer is spoilt rotten. Mortgage rates are obscenely low and, in the majority of cases, buyers are calling all the shots.”

Mr Montlake added that while the passing of the March Brexit deadline will have spurred some into action in April, a broader Brexit apathy was becoming stronger by the day.

He said: “April was the month when activity levels for brokers started to pick up and this was confirmed in the Bank’s latest data.

“People are increasingly of the view that, even if prices fall in the short-term following a potential no-deal Brexit, in the medium-term they will reap the benefits.”

He went on to say that while remortgages had been driving activity for some time, there had been a definitive pick-up in purchases over the past two months.

Richard Pike, marketing director at lending software firm Phoebus, agreed that remortgaging had played a big part in holding up the mortgage market over the past couple of years but said today’s figures showed it was levelling out.

He said: “The trend of people taking advantage of the stamp duty relief to move their current deals will have come to an end and we could see another uptick in the remortgaging figures next month.

“With household debt rising consistently, remortgaging to a better, less expensive deal is one quick way to reduce household spend and even consolidate some debt.

“The number of approvals for house purchase increased, which is a good sign for the whole market. As lenders offer better and better rates and deals, it is a good time for people to move up, or down, the ladder.”

By Imogen Tew

Source: FT Adviser

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Mortgage and business lending rises in April

The level of mortgage lending in the UK rose last month in a sign that the passing of the original Brexit deadline in March has eased fears, according to the Bank of England.

Net mortgage borrowing in April was £4.3 billion with the number of mortgage approvals rising from 49,400 in March to 66,300 last month. Over the previous six months, the average was £3.8 billion.

There were also glimmers of improvements in consumer confidence, with the amount borrowed for goods and services rising to £0.9 billion in April, compared with £0.5 billion in March.

However, the Bank of England pointed out that it was still below the £1.5 billion average seen between January 2016 and June 2018.

Credit card lending fell slightly to £0.2 billion in the period, reversing a boost in March.

Andrew Montlake, director of the UK-wide mortgage broker, Coreco, said that the boost since the passing of the original Brexit deadline could be short-lived.

He explained: “While the passing of the March 29 Brexit deadline will have spurred some into action in April, a broader Brexit apathy is becoming stronger by the day.”

In business lending, the amounts borrowed from UK banks and financial markets increased by £5.7 billion in April, with amount handed out by banks alone rising £4.4 billion.

However, the increase was mainly due to big loans to the manufacturing industry.

Mark Collings, chief commercial officer at debt finance platform CODE Investing, explained: “Despite a continuation of what the Bank’s governor Mark Carney has described as ‘Brexit Fog’, it’s encouraging to see that overall bank lending to business picked up in April.

“The passing of the March 29 Brexit deadline, with all its inherent symbolism, appears to have made some businesses more bullish.

“Drill down into the detail, however, and large manufacturing firms account for most of this increase.”

By Simon Neville

Source: Yahoo Finance UK

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Mortgage approvals increase but gross lending falls

The number of mortgage approvals for home purchases and remortgages increased in April, according to new figures from UK Finance.

Data published today revealed approvals by the main high street banks were 5.4% higher in April 2019 than in the same month of the previous year.

For home purchases, this figure was 8.6% more year-on-year and for remortgages it was 2.2% higher than in April 2018.

In the same period gross mortgage lending in the residential market was £20.3 billion, which was a fall of 1.4% year-on-year.

John Goodall, CEO of Landbay, said: “Mortgage lending remained subdued, and reflected the wider challenges facing the housing market.

“Lenders are having to push down mortgage rates for customers even as funding costs begin to rise, which has led to banks like Tesco bowing out of the market altogether.”

He added that while prices had started to stabilise, until there was clarity on the current political situation it was unlikely there would be any drastic rise in confidence, and subsequently, lending.

Meanwhile, Richard Pike, sales and marketing director of Phoebus Software, said the correlation between the gross mortgage lending figures, which were down, and the number of approvals, which were up across the board, was quite telling.

He added: “As house prices fall, especially in London and the south east, and house buyers also look farther afield into more affordable areas, this gap is only likely to widen.

It is, however, encouraging to see the increase in approvals for home purchase, which does show that people have had enough of sitting on their hands and are making their move.”

Product transfers

UK Finance also revealed 290,000 homeowners switched product with their existing provider in the first quarter of 2019, a decrease of 1.7% year-on-year.

In terms of value, it said this represented £39.2 billion of mortgage debt refinanced internally, which was an increase of 2.1% compared to the same quarter last year.

According to UK Finance, of the total number of product transfers in Q1 of 2019, 161,100 were on an advised basis – a rise of 8.6% year-on-year. These were worth £22.7 billion, an increase 15.3% year-on-year.

Execution-only product transfers went down by 12.1% year-on-year, to 128,900. These were worth £16.5 billion, a decrease of 11.8% compared to the same period last year.

By Kate Saines

Source: Mortgage Finance Gazette

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UK mortgage approvals hit two-year high following Brexit extension

The number of mortgage approvals for house purchases in the UK reached a two-year high in April, a survey showed today, suggesting the country’s housing market may be recovering from a recent slowdown.

UK banks approved 42,989 mortgages in April, the highest figure since February 2017 on a seasonally adjusted basis, and up from 38,554 a year earlier, figures from data firm UK Finance showed.

The value of loans approved for house purchases by high street banks in April rose £1.32bn year on year, compared to a rise of £580m year on year in March.

Britain’s housing market has experienced a Brexit-induced slowdown in recent months as customers put off big purchases due to political uncertainty, despite consumer spending in other areas remaining resilient.

Howard Archer, chief economic advisor to the EY Item Club, said: “April’s marked rise in mortgage approvals suggests that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March.”

“It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” he said.

The number of loans approved by high street banks for remortgaging rose £2.99bn in April compared to a year earlier, as homeowners continued to take advantage of record-low interest rates.

Figures from UK Finance also showed that spending on credit cards rose markedly in April to £11.16bn in seasonally adjusted terms, a rise of 8.8 per cent year on year.

UK Finance said: “This growth in spending reflects consumers’ increased preference for using credit cards as a means of payment, particularly online, because of purchase protection and card benefits.”

“Repayments have remained in line with credit card spending, showing overall that consumers are managing their finances effectively,” the firm said.

Gareth Lewis, commercial director of property lender MT Finance, said it was “encouraging” that “people are using their credit cards sensibly,” meaning “credit card debt isn’t spiralling out of control while interest rates are low”.

Overall consumer lending grew 3.8 per cent in April compared to a year earlier, a slight slowdown from March’s growth rate of 4.1 per cent.

Howard Archer said: “While consumers have clearly been less affected by Brexit concerns than businesses, the overall impression remains that they have nevertheless become more careful in their borrowing amid concerns over the economic outlook.”

The amount Britons saved in ISAs and accounts which require notice to withdraw money fell in April, while instant access saving grew.

By Harry Robertson

Source: City AM

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UK remortgaging rate jumps as owners cash in on low interest rates

The number of people remortgaging their homes with additional borrowing spiked in March, according to data released today, as people took advantage of favourable interest rates.

Meanwhile the number of new loans to both movers and first time buyers fell in March year-on-year, figures from finance and business services company UK Finance have revealed.

In March there were 16,180 new remortgages with additional borrowing, a 9.1 per cent increase year on year. The average amount taken out on top of the remortgage money was £55,700.

There were 1.1 per cent fewer simple pound-for-pound remortgages in March, at 15,030.

New first-time buyer mortgages reached 28,800 in March, according to the finance and business services organisation, 2.4 per cent fewer than in the same month a year earlier.

The number of new mortgages going to those moving house fell six per cent to 25,280.

Andrew Montlake, director of the UK mortgage broker Coreco, said: “With rates nearing rock-bottom given the intensity of competition among lenders, remortgages have gone off the Richter Scale.”

“The 9.1 per cent rise in additional borrowing remortgages compared to a year ago reflects the fact that a lot of people are choosing to add value to their existing homes rather than move,” he said.

“While home-mover mortgages were down in March, purchases have really started to gain momentum since April, with the usual late spring lift being boosted by a growing indifference to Brexit,” Montlake added.

Keith Haggart, managing director of mortgage provider Responsible Lending, said: “March was meant to be the month when the Brexit trigger was pulled, and it may have been a significant deterrent for first-time buyers who tiptoed away from the housing market for the first time in six months, despite low interest rates and other incentives.”

“The jump in remortgaging chimes with a market that is languishing on low supply of homes for sale,” he said.

By Harry Robertson

Source: City AM