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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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Home purchase mortgage approvals plunge almost 10% on a year ago

Mortgage approvals for home purchase hit a six-month low in September, data from the main high street banks shows.

Figures from trade body UK Finance showed there were 37,352 mortgage approvals for house purchase last month, down 9.4% annually and the lowest figure since March 2018.

It is also the third consecutive month that approvals have dropped.

Lenders also approved fewer remortgages, down 7.4% annually to 27,676.

Commenting on the figures, Paul Hunt, managing director of financial technology firm Phoebus Software, said: “We are beginning to see something of a trend with the market waning in the past few months.

“However, recent reports show first-time buyer activity at a 14-month high and there are also growing signs that there is still a good amount of appetite with some estate agents reporting an increase in the number of properties coming to market.

“Nevertheless, to say we are heading into choppy waters is probably an understatement as the politics surrounding Brexit negotiations continue to cast doubt in people’s minds.

“However, with mortgage lenders having quotas to fill and targets to hit, we could see a raft of deals coming to market to tempt. As consumers turn to credit cards to fund their spending, the question will be whether, as we head towards Christmas, people choose property or the path of least resistance.”

Meanwhile, data from Mortgages for Business, based on its third quarter activity, has suggested buy-to-let mortgages for houses in multiple occupation (HMOs) have become the most popular form of borrowing by landlords.

The broker found that 32% of completed purchase transactions were for HMO buy-to-let loans, up from 32% in the second quarter.

Meanwhile, the proportion of standard buy-to-let purchase loans fell from 35% to 33% over the same period.

The broker also found that the proportion of buy-to-let transactions completed by limited companies increased from 42% to 44% between the second and third quarter.

However, their share of the value of lending fell from 44% to 43%.

Looking ahead, there was a drop in the proportion of applications submitted by landlords using a corporate structure from 48% in the second quarter to 44% in the third.

Source: Property Industry Eye