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House Purchase Lending In Q4 At 13-year High

House purchase lending in Q4 2020 reached its highest quarterly level since 2007, UK Finance’s household finance review has found.

With buy-to-let Q4 2020 saw the highest purchase activity since Q1 2016.

In December lending levels were 31% higher than the same month a year earlier.

Eric Leenders, managing director, personal finance at UK Finance, said: “Homebuyers looking to take advantage of the stamp duty holiday were behind the housing market’s strongest quarter for purchases in 13 years, in the final quarter of 2020.

“The stamp duty holiday helped to boost activity at the end of 2020, and it is likely many of these purchases have been brought forward in order to take advantage of the savings.

“The Chancellor’s announcement in the Budget to extend the Stamp Duty holiday until the end of June before then phasing it out will prevent a cliff edge, reducing the risk of house sales collapsing and will prove beneficial for all parties involved in the housing market.”

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Despite the strong end of the year, annual purchases for the whole year were around a tenth lower than the previous year, due to a complete shutdown of the market in the first lockdown.

Richard Pike, Phoebus Software sales and marketing director, said: “The housing market, like many things, is more than the sum of its parts and, with the overall picture painted by these figures from UK Finance, it is evident that the number of mortgage approvals is only part of the story.

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“The stamp duty holiday obviously did as it was intended, stimulating the market in difficult circumstances. It has also created increased demand in a market where there isn’t enough property to meet that demand, which in turn is pushing prices up across the country.

“With many transactions in the pipeline the extension to the SDLT holiday, announced in the Budget yesterday, will go some way to ensuring that more of these complete before the new deadline.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Remortgaging remains high but house purchase lending falls

There were more first-time buyers than home movers in June and house purchase lending was down on the same month last year, according to UK Finance’s Mortgage Trends Update.

A total of 34,900 new first-time buyer mortgages were taken out in June, 3.6% fewer than in the same month a year earlier. They collectively borrowed £5.8 billion, which is down 1.7% year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000.

The number of new home mover mortgages completed in the month stood at 33,700, a drop of 7.9% compared to June last year.  Total new lending to home movers was £7.3 billion, down 6.4% on the previous year. The average home mover is 39 and has a gross household income of £56,000.

Remortgaging fared better, rising by 8.4% year-on-year to 37,400 new remortgages completed valued at £6.8 billion, a rise of 13.3%.

In the buy-to-let space, house purchase continued to decline in June while remortgaging remained steady.

There were 5,400 new buy-to-let home purchase mortgages completed in the month, 19.4% fewer than in the same month a year earlier. By value this was £0.8 billion of lending, a fall of 11.1 per cent.

Buy-to-let remortgages completions stayed at 12,600 and by value this was £2 billion of lending, the same as June 2017.

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Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging continued to dominate in June with figures up 13% on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.

“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first-time buyers and home movers as customers adopted a ‘wait and see’ approach.

“House price inflation has moderated in recent months yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.

“And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”

Source: Mortgage Finance Gazette