mortgage approvals
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UK mortgage approvals for new house purchases tumble despite growth in remortgaging

The number of mortgages approved for house purchases was almost five per cent lower in August compared with the same time last year, providing fresh evidence of flat activity in London’s property market. Despite the fall in new mortgage approvals, remortgaging soared 9.2 per cent during the month, as a rising number of homeowners looked to lock in more favourable deals ahead of expected higher interest rates.

However, the mortgages approved for people buying houses were down 4.2 per cent year-on-year, underlining a continuation of subdued activity in London’s housing market.

Meanwhile, gross mortgage lending for the total market in August was £24.1bn, falling 1.2 per cent lower than a year earlier, according to today’s UK Finance figures.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, said: “At first glance these figures look quite encouraging but when you appreciate that a substantial part of the increase in lending is to do with remortgaging in anticipation of higher interest rates, the picture is not so rosy.”

Leaf added: “Mortgage approvals for house purchase are lower compared with this time last year, which was not a particularly impressive time anyway. Clearly, the market remains fairly flat without too much movement one way or the other, which is reflected on the high street.

“Confidence is in short supply unless new market conditions are recognised. Having said that, we are seeing more viewings and more realism as the summer period is now behind us. It is now up to sellers to recognise that the market is unlikely to change for the better for some time.”

The news comes despite recent Bank of England data showing that mortgage lending picked up in the second quarter of the year, with new commitments hitting their highest level in more than a decade amid a bump in the number of first-time buyers coming onto the property market.

Peter Tyler, director at UK Finance, said: “Remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals. Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.

“However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”

Source: City A.M.

remortgaging
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This July was strongest for remortgaging in a decade

This July was the busiest for remortgaging in a decade, as there were 46,900 residential transactions worth £8.7bn that completed, UK Finance figures show.

This means that volumes were 23.1% higher than the same month in 2017 and by value there was a 26.1% increase year-on-year.

There was a similar trend in buy-to-let remortgaging, where 14,700 loans worth £2.4bn were completed, increases of 7.3% by volume and 9.1% by value year-on-year.

Jackie Bennett, director of mortgages at UK Finance, said: “The residential remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise by locking into attractive fixed-rate deals.

“There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market.”

The number of buy-to-let purchase mortgages completed fell by 14.1% year-on-year, with just 14,700 being completed.

Richard Pike, sales and marketing director of Phoebus Software, said: “While July is traditionally a busy month, it is clear that a number of people were kicked into action by the anticipation of the base rate rise.

“It was not such a rosy picture for purchases however. It is clear that consumer confidence is starting to take a hit, undoubtedly by all the talk of a no deal Brexit.

“Whenever there is uncertainty, people tend to put off making big decisions such as buying a new home. I expect to see more and more caution over the next six months as people wait to see what the outcome will be and what effect it will have on them personally.

“If ultimately, the result is better than expected, this could turn out to be pent up demand with a surge in house moves afterwards, but it could be many months before we see this come to fruition.”

Shaun Church, director at Private Finance, said: “Remortgage activity appears to be the main thing keeping the buy-to-let market afloat.

“Though punitive regulatory changes have dissuaded new entrants to the market, today’s data suggests many existing landlords are staying put.

“With mortgage costs often being one of landlords’ biggest expenses, swapping to a lower-rate deal is a sensible strategy for making a rental property more profitable.”

Source: Mortgage Introducer

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Fall in remortgaging and buy-to-let lending

First-time buyer mortgage lending increased in the second quarter of this year but remortgaging and buy-to-let experienced a decline.

Data released today by the Bank of England revealed the outstanding value of all residential loans continued on its upward trajectory, rising in Quarter Two (Q2) to £1,417.2 billion which is 3.8% higher than Q2 last year.

According to quarterly statistics, based on the lending activity of over 300 lenders and administrators, new commitments – which are loans agreed to advance in coming months – were at their highest level since the first quarter of 2008.

First-time buyers

There was also an increase in the amount of lending to first-time buyers and the proportion of high loan-to-income (LTI) finance has increased during the quarter too. High LTI lending was described as loans above four times the value of the annual income for a single buyer or three times the annual income for joint buyers.

However, the overall proportion of buy-to-let and remortgaging loans have decreased since the last quarter, the data revealed.

As a proportion of new lending, remortgaging accounted for 30.8% – a fall of 2% on the previous quarter. Meanwhile, the share of new lending for which buy-to-let accounted was also in decline this quarter, down to 13.1%.

Tax changes hitting buy-to-let

Ross Boyd, founder of mortgage platform Dashly.com, blamed the tough new rules facing landlords on the lull in buy-to-let.

He said: “Where homeowners tread, landlords are continuing to choose not to follow. For investors it’s more of the same, with the decline in buy-to-let lending since the first quarter firmly against the run of play.

“It’s more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.”

He added: “Traditional homeowners, though, are not feeling the pinch quite so much as arrears continue to fall. It’s yet another sign of consumer confidence, even if it’s not totally surprising with rates still on the floor by historic standards.”

Source: Mortgage Finance Gazette

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Questions raised over impact of Stamp Duty cut in the capital as home buyer mortgage approvals decline

Remortgaging continued to dominate home lending across some of the main UK regions at the expense of first-time buyers and home movers, UK Finance has revealed.

The trade body for the banking sector has released mortgage lending figures for the second quarter of 2018, covering London, Scotland, Wales and Northern Ireland. It doesn’t compile data for England.

Remortgage approvals in the capital hit a nine-year high at 15,200 in the second quarter, up 16.9% annually.

However, home mover approvals fell 8.1% annually to 6,800 in the second quarter, and first-time buyers saw a 3.7% drop in the capital at 10,300 approvals.

Shaun Church, director at mortgage broker Private Finance, said: “After decades of boom, the lack of home-buyer activity and month-on-month decline of house prices London marks unchartered waters for the capital’s property market.

“Even first-time-buyer activity, which has performed encouragingly throughout 2018, has now declined. This suggests that despite easing house price growth, Stamp Duty exemptions and Help to Buy, affordability remains out of reach for London’s Generation Rent.

“This may translate to greater activity in the commuter belt as would-be buyers seek more affordable properties within reaching distance of the capital.

“Lenders are still displaying a strong appetite to lend, resulting in competitive mortgage rates and deals.

“With house prices easing and rates still favourable, now is an opportune moment for first-time-buyers to make their first step on to the housing ladder – though they may wish to look outside of the capital for more affordable deals.”

This trend was reflected in Scotland and Wales where remortgage approvals increased, but home mover mortgages fell 2.1% and 2.6% respectively, and the number of first-time buyer mortgages declined 3.1% and 2.4% in each country.

Northern Ireland did manage to buck the trend, with first-time buyer approvals at their highest level since 2005, up 9.5% annually to 2,300, while home mover mortgages rose 6.7% to 1,600.

Source: Property Industry Eye

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London remortgage activity reaches nine year high

Remortgaging in London reached its highest level in nine years in the second quarter of this year, as customers locked into deals ahead of the anticipated base rate rise, UK Finance figures show.

There were 15,200 homeowner remortgages in the second quarter, 16.9% more than in the same quarter a year earlier.

By value there was £4.84bn of remortgaging, 23.2% more year-on-year.

Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging in London reached its highest level in nine years in the second quarter of this year, as homeowners locked into competitive deals amid anticipation of the recent base rate rise.

“House purchase activity has slowed slightly, with affordability remaining a challenge for many would-be borrowers. This underlines the need for clarity over the future of the Help to Buy scheme after 2021.”

There were just 6,800 homemover mortgages completed in London in the second quarter, 8.1% fewer than in the same quarter of 2017.

Meanwhile there were 10,300 new first-time buyer mortgages completed, 3.7% fewer than in the same quarter of 2017.

Source: Mortgage Introducer

Remortgaging
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Remortgaging dominated market ahead of rate rise

Remortgaging activity remained high in June whilst the remainder of the housing market slowed in anticipation of this month’s base rate rise, according to UK Finance.

The trade association’s mortgage trends update, released today (14 August), showed 37,400 new homeowner remortgages were completed in June, an increase of 8.4 per cent on the same month last year, at a value of £6.8bn.

However, the update reported first-time buyer, homemover and buy-to-let home purchase mortgages were all down on levels from the same month a year earlier.

UK Finance recorded 34,900 new first-time buyer mortgages completed in June, 3.6 per cent fewer than in June 2017, and 33,700 new homemover mortgages, down 7.9 per cent on the year before, while buy-to-let mortgages dropped 19.4 per cent to 5,400 last month on the previous year.

Jackie Bennett, director of mortgages at UK Finance, said remortgaging continued to dominate in June as existing two and three year products came to an end and borrowers opted for new deals.

She said: “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 homemovers as customers adopted a ‘wait and see’ approach.”

On 2 August the base rate rose to its highest level since the financial crisis, with the Bank of England increasing it to 0.75 per cent.

In response a number of lenders have put their mortgage rates up on their variable rate products.

Ms Bennett said affordability remained a challenge for would-be borrowers as house price inflation remained above earnings growth, despite moderating in recent months.

Vikki Jefferies, proposition director at PRIMIS Mortgage Network and Personal Touch Financial Services, said the key theme of remortgage demand will only become more apparent in the wake of the Bank of England’s rate rise.

Ms Jefferies said: “These figures are not only testament to the hard work that brokers have done to educate their customers about the benefits of remortgaging, but also show that borrowers are eager to lock in favourable rates before any further rate rises.”

Ms Jefferies said she would welcome a rise in the number of first-time buyers next month as innovation in the mortgage market continues to heat up, making it easier for these borrowers to access the funds they need.

Mark Harris, chief executive of mortgage broker SPF Private Clients, also expects remortgaging will continue to be popular as those who haven not got around to doing so finally take the plunge.

He said: “With most lenders pricing in the base rate rise before it actually happened, the good news for borrowers is that fixes in particular are still very competitive – now is a good time to fix to protect borrowers from any future rate rises.”

Mr Harris said although buy-to-let continues to be a challenge with the harsher tax and regulatory environment putting off novice investors, there are still seasoned landlords committed to the sector for whom it is business as usual.

Source: FT Adviser

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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.

Comment

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

Buy to let investors
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Buy To Let Investors Encouraged To Remortgage Following Interest Rate Hike

Buy to let investors are being encouraged to remortgage following the decision from the Bank of England to raise interest rates.

The Bank of England has decided to raise interest rates by 0.25 per cent, meaning that many landlords could see their finances squeezed further. The change marks the highest interest rate rise since March 2009, with concerns posed that this could mean the Bank may begin increasing rates on a regular basis. Any landlords who are heavily geared could therefore be negatively affected by this and should look to remortgage.

Research from DJ Alexander Ltd has discovered that one in three landlords are already paying too much for their mortgage. An interest rate hike will further exacerbate this problem.

Head of financial services at DJ Alexander Ltd, Alan Kent, explained: ‘We have already seen landlords who have had the same mortgage for years and are experiencing falling yields and the likelihood of further interest rate rises will only compound this situation. If a landlord is on a lender’s standard variable rate, then it is highly likely that this will increase with each interest rate rise resulting in an erosion of the profitability of the property investment.’

He continued: ‘A decade ago the base rate was 5 per cent and lenders variable rates were typically 1-2 per cent higher, however through-out Q4 of 2008 and Q1 of 2009, there was a sharp reduction in the base rate but not a comparable reduction in rates charged to customers. It will be interesting to see whether lenders will be keener to pass on these interest rate increases in contrast to their reluctance to reduce rates ten years ago.

‘Consumers, and this includes landlords and property investors, must ensure that they shop around to get the best rate for themselves. This interest rate cut, and any subsequent ones may provide a source of competition between lenders who wish to attract new business. It is important that landlords monitor their borrowing costs closely and shift lenders and rates where possible to give themselves the greatest opportunity for an improved yield on their investment.’

Source: Residential Landlord

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Buy To Let Transactions Fall As Remortgaging Rises

Volumes of buy to let investment transactions have fallen as remortgage deals begin to rise, according to the latest LendInvest BTL Index.

The buy to let index surveys 105 postcode areas around England and Wales based on a combination of factors including capital value growth, transaction volumes, rental yield and rental price growth. The index for July 2018 found that Luton came out on top for the first time since December 2016 as offering the UK’s best property investment opportunity.

Birmingham was also singled out as a top investment opportunity, with the Midlands city pulling ahead in front of Manchester to take fourth place.

Cambridge and Bristol were also marked out as regional capitals, pushing their way into the top ten and claiming 6th and 8th places respectively.

Finally, a year on from a sharp decline, certain London postcodes are showing recovery. South East London climbed from number 79, where it placed in June 2017, to number 33.

Sales Director at LendInvest, Ian Boden, said: ‘It’d be so easy to look at the underlying data that tells us transactions volumes are down and make dire predictions about the health and wealth of the rental market. Instead, what our Index proves once again is that looking at one metric in the housing market is never enough. One metric on its own can’t clearly define the performance of a city’s property market.’

He continued: ‘Each of the very top performing BTL locations this quarter is experiencing a slowdown in transactions – substantial falls in places, dips in others. But, the best places this quarter continue to outperform the competition well thanks to strong performances on other, equally important metrics like rental yield, capital gains and rental price growth. Data from the BTL Index, UK Finance and our own experience as a mortgage lender strongly suggests that right now a ‘buy, hold and remortgage’ strategy is some investors’ preference while the market works through a possible slowdown.’

Source: Residential Landlord

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Lenders in the UK think 10 year mortgage deals are set to become popular

10 year mortgage deals look set to become more popular among home movers and those remortgaging in the UK as two major lender announced new long term products.

The lenders, Lloyds Bank and the Halifax, believe that borrowers are looking for more certainty going forward and are looking beyond the typical two year products and increasingly beyond five years.

The new mortgage deals from Lloyds have with and without fee options. They come with a 0.20% discount for Club Lloyds customers, plus an additional 0.20% discount for these customers available until 19 August 2018.

Examples of the 10 year fixed rates include remortgages at 2.42% with 60% LTV and £995 fee, including 0.40% discount and 2.64% with 75% LTV and £995 fee including 0.40% discount.

For home movers the Lloyds products include a 2.64% deal with 60% LTV and £995 fee, including 0.40% discount and 2.84% at 75% LTV and £995 fee, including 0.40% discount.

‘We’re seeing customers looking for longer periods of certainty when it comes to mortgage payments. Our new 10 year fixed mortgages will help provide remortgage customers and home movers with greater certainty with budgeting over the longer term,’ said Andrew Mason, Lloyds Bank mortgage products director.

With the Halifax, which is part of the Lloyds Banking Group, the new fixes are available at 60% LTV and 75% LTV for loans between £25,000 and £1 million, including options with and without fees.

Home mover rates start at 2.44% at 60% LTV with a £995 fee and 2.59% with 75% LTV and £995 fee, while for remortgage customers the rates begin at 2.69% with 60% LTV with a £995 fee and 2.89% with 75% LTV with a £995 fee.

‘Many home owners are looking for certainty with their mortgage payments over the longer term to give more peace of mind when it comes to their monthly outgoings,’ said Andy Bickers, mortgages director at Halifax.

‘We are always coming up with new ways to meet the needs of mortgage customers and bolstering our existing range of two and five year fixed rate products with these new, competitively priced 10 year fixes,’ he explained.

He pointed out that customers can also benefit from £500 to spend on Halifax’s new Mortgage gift site if they apply for a qualifying mortgage by 12 August. Following the completion of their mortgage, customers will be given login details to access the site and choose from a range of 40,000 items, including household appliances, garden furniture and family days out.

Source: Property Wire