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UK Finance: Gross mortgage lending increases in July

Gross mortgage lending across the residential market and mortgage approvals both rose in July, UK Finance’s Household Finance Update has found.

Gross mortgage lending across the residential market in July 2019 was £26.1bn, 2.9% higher than the same month in 2018 and the highest since March 2016.

Mortgage approvals for home purchase were 16.4% higher, remortgage approvals were 19.4% higher and approvals for other secured borrowing were 12.7% higher than the same month a year earlier.

Andrew Montlake, managing director of mortgage broker, Coreco, said: “July was our biggest month of the year by a distance and on this evidence we weren’t alone.

“Remortgages were the driving force of the rampant activity levels in July, with households taking advantage of the exceptionally competitive mortgage rates available.

“Lenders are awash with cash and borrowers are making hay while the sun shines.

“First time buyer numbers are also surging, especially among those funded by the Bank of Mum and Dad.

“July was the month when the odds of a no-deal Brexit got a lot shorter and this clearly incentivised people to act.

“Borrowers have become increasingly worried that lenders could easily pull down the shutters in the event of a disorderly Brexit and also increase their rates so they’re getting on with it.

“Similarly, a lot of prospective buyers are wary that house prices could bounce back quite sharply if no-deal proves to be a damp squib and the balance of power swings back to sellers.

“Many people have come to the conclusion that there is as much risk to the wait-and-see approach to Brexit as just getting on with it.”

There were 95,126 mortgages approved by the main high street banks in July 2019, the highest monthly total since July 2009 when the figure stood at 99,970.

Richard Pike, Phoebus Software sales and marketing director, added: “These latest figures from UK Finance are the most encouraging for a while.

“The statistics bear out the regional figures released last week, which showed that across every region, other than in London, mortgage approvals were up.

“Mind you, even in London first-time buyer numbers were up in line with the rest of the country.

“As we know the lending figures for July were for mortgages approved up to three months ago.

“It will be very interesting to see what the figures look like in September and October when the latest HMRC figures showed that property transactions fell considerably in July.”

Gareth Lewis, commercial director of property lender MT Finance, said: “At the back end of the summer holidays, these figures are a nice jump into autumn, and a welcome contrast to the subdued data we have got used to seeing.

“High street banks are lending back at 2009 levels so are loosening their credit a little to encompass more borrowing.

“There is also more demand from people buying property, with home purchases also up, which is great news as it shows transactional flow is happening.”

By Michael Lloyd

Source: Mortgage Introducer