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Mortgage market subdued after summer highs

Remortgage levels have steadied after a period of strong summer growth as activity across the mortgage market softened, according to trade body figures.

UK Finance found 35,600 homeowner remortgages and 12,300 buy-to-let remortgages were completed in September – down 0.6 percentage points and 0.8 percentage points respectively on the same month a year earlier.

Jackie Bennett, director of mortgages at UK Finance, said the figures showed remortgaging for residential and buy-to-let properties had levelled out after a period of strong growth, reflecting the number of fixed rate loans reaching maturity.

Meanwhile purchase activity across the residential market fell in September, with 29,400 new first-time buyer mortgages completed in the month – from 35,400 in August and 30,800 in September 2017.

New homemover mortgages also fell to 29,400, down from 38,000 the month before and 32,100 in the same month a year earlier.

Ms Bennett said: “Demand for house purchases for both first-time buyers and homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the south east.”

The buy-to-let purchase market also softened in September with 5,200 new mortgages completed in the month, 18.8 percentage points fewer than in the same month a year earlier.

Ms Bennett suggested the lending in the buy-to-let market remained subdued as a result of recent tax, regulatory and legislative changes.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the mortgage market was inevitably subdued as people delayed decision-making while political and economic uncertainty continued.

He said: “This is likely to continue into the spring, until we pass the Brexit deadline in March, by which point some of that pent-up demand may be released and the market could well pick up.”

Mr Harris added: “UK Finance figures do not appear to take into account product transfers, which will have a significant impact on remortgage numbers.

“This market is much larger today than 12 months ago as borrowers opt for the simpler process of sticking with the same lender and moving onto another rate, rather than starting a new application with another lender.”

Source: FT Adviser

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Landlords warned of 2019 rate rises

Landlords must act on competitive mortgage deals before looming buy-to-let rate rises, a broker has warned.

Andrew Turner, chief executive at buy-to-let broker Commercial Trust Limited, urged borrowers to take advantage of cheaper deals while they were available – predicting rates were due to rise in 2019.

Mr Turner said “historically low” rates in the buy-to-let sector had been prominent for some time and reflect a “hugely competitive” marketplace.

But he warned this trend might begin to change as 2019 approached, with rates tied to another potential Bank of England rate rise and Brexit uncertainty.

He said: “The Bank of England’s monetary policy committee have implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

“In my view this will have to change.”

Mr Turner added: “The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

Monthly figures from trade body UK Finance identified a recent trend in buy-to-let remortgage growth while purchases in the same market had droppedamid recent tax and underwriting changes.

Last month Jackie Bennett, director of mortgages at UK Finance, suggested the recent relatively strong growth in buy-to-let remortgages showed many existing landlords remained committed to the market.

Mr Turner said he feels the surge in landlord activity around buy-to-let remortgages was no coincidence.

He said: “For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Liz Syms, chief executive at Connect Mortgages, said the market was still in a very low interest rate environment and fixed rates, including longer term fixed rates, were very well priced.

She said: “All borrower types should look to take advantage of the low fixed rates as there is no guarantee on how long these will continue at the current level, and predictions expect a continued gradual increase of rates.”

But Ms Syms stressed borrowers must also consider future plans when considering longer term fixed rates.

She said: “Most fixed rates have early repayment charges if they are repaid within the fixed rate period, so if there is a chance the borrower may wish to sell the property or change their funding requirements during this period they should consider all options available and not just fixed rates.”

Source: FT Adviser

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Andrew Turner: Buy-to-let mortgage rate rises expected

Buy-to-let mortgage rates are expected to rise so landlords should take advantage of the current low rate deals while they are still available, Andrew Turner, chief executive, at specialist buy-to let broker Commercial Trust, has argued.

He said at the moment there are some historically low rates for both tracker and fixed rate buy-to-let mortgage products.

Turner said: “This has been the case for some time and is reflective of a hugely competitive market place, where lenders are trying to outdo one another with enticing mortgage deals, encompassing low rates, low fees, or incentives such as cash-back or free valuations.

“With over 2,000 products in the buy-to-let marketplace it is clear that there is a myriad of choice for investors. This volume of choice brings with it complexity, where the lowest rate does not necessarily equate to the cheapest overall deal.”

The Bank of England’s Monetary Policy Committee (MPC) has implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

Turner added: “In my view this will have to change. The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

UK Finance buy-to-let data shows strength in remortgaging, whilst the changes in buy-to-let have tempered purchases somewhat.

In November, its statistics indicated that buy-to let remortgaging activity in 2018 would exceed its forecasts by approximately £3bn, while a similar figure would represent a shortfall in its forecasts for buy-to-let purchase business in the year.

Turner said: “It can be no coincidence that there has been a surge in landlord activity around buy-to-let remortgages, with such uncertainty affecting their businesses.

“For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Source: Mortgage Introducer