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UK property market: Mortgage approvals dip from 26-month April high

The number of residential mortgages approved by banks dipped last month, easing back from a 26-month high in April but remaining above the monthly average.

Seasonally adjusted figures show that banks in Britain approved 42,384 house purchase mortgages in May, falling from roughly 42,900 in April but beating the consensus of 41,000.

The actual number of mortgages for home purchase approved by the main high street banks in May 2019 was also 9.1 per cent higher than in the same month in 2018, marking the highest annual level since June 2016.

According to UK Finance, which released the figures this morning, gross mortgage lending across the residential market in May 2019 was £21.9bn, falling 0.4 per cent compared with the same month in 2018.

“May’s mortgage approvals data support the view that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March. It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” said Howard Archer, chief economic advisor at the EY ITEM Club.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The increase in mortgages for home purchase, rising to the highest level in three years, is hugely encouraging when you consider the political uncertainty which is causing many people to put decisions to move on hold.”

He added: “It suggests a much more resilient market than one might expect, and once a decision is made over Brexit, one way or another, we are likely to see a further uptick in transactions as pent-up demand is released.”

By Sebastian McCarthy

Source: City AM

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Mortgage rates on the rise

The cost of the most popular two, three and five year mortgages has increased over the past three months after two quarters of cost reduction, new data have shown.

With a current rate of 2.27 per cent (as of 1 November 2018), the cost of a typical 60 per cent LTV five-year fixed rate mortgage is now 2 per cent higher than it was in August, according to product analysis provider Mortgage Brain.

At the same time some two, three and five year fixed rate mortgages have recorded increases of 1 per cent.

The Bank of England increased the base rate of interest from 0.5 per cent to 0.75 per cent in the beginning of August and has kept it there since.

Since the start of August, the cost of a 70 per cent and 80 per cent LTV two year tracker has increased by 4 per cent, while its 60 per cent and 90 per cent counterparts have increased by 3 per cent over the same period, according to Mortgage Brain.

Based on a £150k mortgage, borrowers looking to take out one of these mortgages now face an annualised increase of up to £288, the provider said.

Mark Lofthouse, CEO of Mortgage Brain, said: “With the Bank of England maintaining the base rate at 0.75 per cent for the third consecutive month, it’s looking more and more likely that any future rate increases will be at a slow and gradual pace.

“A lot of the movement that we saw in our latest product analysis has happened since the start of September, however, so once again, the UK mortgage market could be on the verge of change where we revert back to seeing a period of increases in the cost of residential mortgages.”

For the first time in many months, Mortgage Brain’s longer term analysis also showed a number of annual cost increases.

The cost of the 70 per cent two year tracker, for example, is now 5 per cent higher than it was at the start
of November 2017, while a 2 per cent increase in cost has been recorded for some two and five year fixed rate mortgages too.

Kevin Roberts, director at Legal & General Mortgage Club, said despite the increases mortgage rates continued to remain at near-record lows and there was a growing number of innovative solutions, particularly for first-time buyers and retirees available on the market.

Andrew Montlake, director at mortgage broker Coreco, agreed. He said: “Specialist mortgage lenders, most of whom only go through brokers, have some really good offerings in this arena at present and there is no need for any borrower to feel that they have no options.”

Source: FT Adviser