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Lending On The Rise

On a non-seasonally adjusted basis, UK Finance data shows that mortgage lending in June rose with first-time buyers borrowing £5.9bn, up 26% on the previous month and 9% on June 2016. This was roughly 36,000 loans, up 22% month-on-month and 6% year-on-year. Home movers borrowed £7.8bn, up 26% on May and 15% year-on-year. This equated to 36,500 loans, up 24% month-on-month and 9% compared to a year ago, and remortgage activity totalled £6bn, up 5% by value on May and 7% on a year ago. The number of remortgage loans totalled 34,300, up 5% month-on-month and 6% on a year ago.   Gross buy-to-let lending was also up totalling £3.0bn, up 3% on May and up 3% compared to June 2016. These equated to 19,700 loans, up 3% month-on-month and 6% year-on-year. The proportion of household income used to service capital and interest rates continued to be near historic lows in June for both first-time buyers and home movers at 17.3% and 17.5% respectively with affordability metrics for first-time buyers indicating the typical loan size has increased from £137,000 in May to £139,000 in June. The average household income increased to £41,000 from £40,500 meaning the income multiple went up from 3.58 to 3.59. The average amount borrowed by home movers in the UK increased to £180,000 from £177,000 the previous month, while the average home mover household income increased month-on-month from £54,900 to £55,200. The income multiple for the average home mover went up to 3.39 from... read more

Time for a remortgage

According to the latest statistics from UK Finance, re-mortgaging strengthened in July and reached its highest level since January, with customers attracted by borrowing rates that are at or close to their historic low point. The increase in activity in July means that, over the last year, the number of people re-mortgaging has been at its highest since 2009. Lending for house purchase was lower in July than in the preceding month, with the market expecting to continue to soften a little in the coming months. There was a smaller increase in both the value and volume of buy-to-let lending. The proportion of household income taken up by monthly mortgage payments nudged upwards in July for both first-time buyers (17.4%) and movers (17.6%). But it remained low by historical standards. The average amount borrowed by a first-time buyer edged up from £138,750 in June to £139,000 in July. The average first-time buyer household income declined marginally, which means that their average income multiple nudged up from 3.59 to 3.60. The average amount borrowed by movers was unchanged at £180,000, as was their average income multiple of 3.39. Re-mortgaging accounted for more than 70% of all buy-to-let lending in July. Buy-to-let re-mortgaging was 10% higher than in June, but overall the sector continued to reflect the more subdued levels of activity seen since the introduction of higher stamp duty in the spring of... read more

Choice is Everything

The number of mortgage products available has increased for yet another month to stand at a whopping 4,657. The data, taken from Moneyfacts’ monthly Mortgage Treasury Report, shows that the number of live deals has risen by 53 on July and by 843 on last August, when there were 3,814 deals available. Choice has been increasing for longer than that, though, with this month’s increase marking the 15th month in a row that product numbers have improved according to Moneyfacts. Indeed, the residential mortgage market has grown substantially since product numbers hit an all-time low of 1,209 in April 2009. Even compared to five years ago, when the number of products stood at 2,888, there has been an increase of 61%. The research highlights the most recent increase in product numbers is largely due to lenders entering the three-year fixed rate... read more

Missing Out

According to UK Finance, the number of mortgages in arrears of 2.5% or more of the outstanding balance declined to 88,200 in the second quarter of this year, the lowest level since at least 1994 when this run of data began. The total was 5% lower than in the first quarter (92,600) and amounted to 0.8% of the more than 11 million mortgages outstanding in the UK. The second quarter also saw a fall in the number of mortgages across all arrears bands, including those with the highest levels of arrears. In the same period, the number of mortgages with arrears of 10% or more of the outstanding balance totalled 25,200, down 5% from 26,500 in the preceding quarter. This brought a welcome end to a period of five successive quarters in which this figure had edged upwards from 23,400 in the first quarter of 2016. The number of properties taken into possession also declined in the second quarter from 1,900 to 1,800 (accounting for 0.02% of all mortgages). The total was the same as in the final quarter of last year, and is the lowest figure since quarterly data was first published in 2008. In line with a trend that has become established in recent data, the rate of buy-to-let arrears was lower than arrears in the owner-occupied sector, although the buy-to-let possession rate was higher. This is because lenders extend a high level of forbearance to owner-occupiers to help them overcome any period of financial difficulty and stay in their homes wherever... read more

Rent Costs On The Increase

According to the ARLA UK Private Rented Sector Report for June, the number of letting agents who saw landlords increasing rent costs for tenants rose to 31 per cent in June, up from just 27 per cent in May. This is the highest level since April 2016, when 31 per cent of agents reported rent hikes too. Feedback from letting agents suggests they would like the Government to scrap the impending ban on letting agent fees (83 per cent)  -however three quarters (73 per cent) would also like the Government to focus on improving enforcement for rogue agents. More than three in five (62 per cent) want the new Government to regulate the sector, while a quarter (26 per cent) think they should provide tax breaks to encourage longer term tenancies The number of properties managed per member branch increased marginally in June, to 190 – up from 189 in May. Year on year, this figure has increased by eight per cent. In June last year, letting agents managed just 176 properties on average In June, demand from tenants dropped slightly, with 61 new tenants registered per branch. In April and May, agents registered 65 on... read more

Generation Debt

According to a new study from insurer LV, renters among the late-Millennial generation (25-34 years old) are one of the least financially resilient groups in the UK. Based on research conducted with over 9,000 people, the first instalment of LV’s “Income Roulette” research found that more than half (55%) of 25-34 year olds fall short of the Money Advice Service (MAS) recommended amount of savings to be financially resilient. Resilience can be defined as someone who has 90 days’ worth of outgoings in savings, however the research found that a third (34%) of late-Millennials could only survive for one month or less if they lost their income. These figures are even more pronounced for renters of this age, who make up almost half (45%) of the group. Two-thirds (65%) of 25-34 year olds who rent don’t have the level of savings specified by MAS – almost double the national average (37%) – and 45% could only cope for one month or less without their income. In addition, more than two in five (44%) aren’t confident in their ability to handle a personal financial crisis, again far higher than the UK average (33%). This group of renters among late-Millennials are particularly struggling with debt, leading to LV dubbing them “Generation Debt”. 43% say they can’t save any money at all with student debt being this group’s biggest obstacle to saving (40%), followed by credit card bills (32%). Half (51%) have some form of unsecured debt and one in five (20%) owe more than £5,000. Further to this, double the national average are in their authorised overdraft (21% vs 11%) and... read more

Nothing As Certain

Homeowners spend an average £12,693 in total on stamp duty as they move up the housing ladder, according to the latest research from Lloyds Bank. A typical first time buyer would have paid an average stamp duty of £758 in March 2001, £1,989 for their second home in March 2009 and £9,946 for their final step in March 2017. Homebuyers in England and Wales paid £8.3 billion in stamp duty in 2016 – £1.2 billion more than in 2015. This rise reversed the £571 million decline between 2014 and 2015, which resulted from the stamp duty reforms that came into place in December 2014. The highest overall stamp duty bills are faced by buyers in London and the South East. In London, homebuyers pay a total of £40,576, 320% more than the average for England and Wales. In the South East, the overall bill is £20,133. The lowest bills are in the North (£4,212) and Wales (£4,489). Other research findings show that the proportion of first time buyers paying stamp duty has risen in the past 16 years from 47% in 2001 to 78% in 2017. In Greater London, 100% of first time buyers face paying stamp duty with 98% of first time buyers paying the tax in the South East. The only region where fewer than half of first time buyers pay stamp duty is the North 41%. In the southern regions, nearly all home movers now face paying stamp duty – London (100%), South East (99%), South West (97%) and East Anglia (97%). By comparison, 72% of homemovers in the North and 78% in Wales pay stamp... read more

Steady As She Goes

UK Finance estimates that gross mortgage lending reached £22.1 billion in June. This is 9% higher than May’s lending total of £20.3 billion, and 3% higher than the £21.5 billion lent in June last year. Gross mortgage lending for the second quarter of 2017 was therefore an estimated £60.3 billion. This is a 3% increase on the first quarter of this year and a 6% increase on the £57.1 billion lent in the second quarter of 2016. UK Finance, the body that represents nearly 300 of the leading firms providing finance, banking, markets and payments-related services in or from the UK highlights that a period of belt-tightening now seems to be underway as inflation begins to erode consumer spending power, and consumer confidence weakens. Given that the economy and housing market are closely linked, this has contributed to the activity plateau since the start of the year. Looking ahead, UK Finance suggests housing market activity is likely to reflect economic conditions – a deterioration would likely dampen first-time buyer numbers and homeowners remortgaging – the factors that have supported lending... read more

Where have all the movers gone?

Before the recession, there were about 1.6 million home sales a year in the UK, which plummeted to 860,000 in 2009 but has since recovered to around 1.2 million. New research published by the Council of Mortgage Lenders (CML) suggests that the shortfall is largely the result of ‘missing movers’ – mortgaged home-owners not moving up the housing ladder. The CML commissioned researchers Neal Hudson and Brian Green to explore the phenomenon. They suggest that ‘missing movers’ account for about 320,000 of the annual housing transaction shortfall. They point to a number of reasons for the decline, including the fact that there are now fewer mortgaged owners, and they tend to be older and so naturally less likely to move. However, there are still around 140,000 missing moves that can be attributed to a decline in the rates of moving among mortgaged home-owners. Three factors determine the moving rate among this groups – their desire to move, sufficient funds, and the availability of a home they want to buy. Of these three factors, the research suggests that the availability of sufficient funds – specifically, sufficient equity – is the dominant factor holding back the mortgaged mover rate. The researchers observe that, in many ways, it is not the present but the past that is extraordinary. For five decades the market underwent changes that provided an enormous boost to the ability of people to buy and to own their homes. But expecting a return to those conditions is unrealistic, they... read more

Close to the boom

The number of first-time buyers (FTBs) reached an estimated 162,704 in the first six months of 2017, only 15% below the peak of the last boom in 2006 (190,900), according to the latest Halifax First Time Buyer Review. Although the growth in FTBs slowed to just 3%, compared to an increase of 10% last year, the number of homeowners getting on to the property ladder for the first time is up from 154,200 in the same period in 2016 and more than double the market low in the first half of 2009 (72,700). A decade ago, just over a third (36%) of all house purchases financed by a mortgage were made by first-time buyers. In 2017, this proportion is estimated to have risen to almost half (47%), with the share growing from 44% since the launch of the Help to Buy scheme in April 2013. Whilst the home mover (current owner occupier) market has slowed, housing activity has been dependent on buyers taking the first step on the ladder. In the first half of 2017, the average house price paid by first-time buyers was £207,693 – the highest on record. In the past year the average value of a typical first-time buyer home has grown by 4% from £199,414. And in the past five years, the average price has grown by 50% from £138,663 to £207,693 (an increase of 50% or £69,025), comfortably outperforming price growth across the entire market... read more
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