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Archive for the ‘Mortgage lending figures’ Category
Tuesday, August 30th, 2011
Mortgage approvals hit 14-month high, says Bank of England, but figures remain very low compared to long-term norms
Mortgage lending picked up slightly in July, with an increase in the number of loans approved for both house purchases and remortgages, figures from the Bank of England show. However, the rise in lending was below the previous six-month average, suggesting the housing market is still in the doldrums.
The figures, which were released as the National Housing Federation predicted a slump in homeownership to the levels of the mid-1980s, show that 100,320 mortgages worth £11.5bn were approved in July.
Total lending secured on homes rose by £0.7bn over the month, compared with the previous six-month average of £0.9bn.
The number of loans approved for house purchase rose to 49,239, up slightly from June’s figure of 48,500 and above the previous six-month average of 46,822. The figure was up only marginally on the 48,562 loans approved last July, and is well below the levels of more than 100,000 a month seen during the housing boom.
The increase in remortgaging activity was minimal, with the number of loans approved rising by just 20 on June’s figures at 30,810. This was lower than the previous six-month average of 31,340 and could be a result of borrowers opting to stay on their lenders’ standard variable rates as the threat of an interest rate rise recedes.
Despite approvals hitting a 14-month high in July, activity remains very low compared to long-term norms.
Howard Archer, chief UK economist at IHS Global Insight, said the increase needed to be put into perspective.
“Mortgage approvals have actually averaged around 90,000 a month since 1993, while a level of 70,000-80,000 has in the past been considered consistent with stable house prices,” he said.
“Housing market activity remains at a very weak level that historically has been associated with falling house prices, despite rising modestly from their lows earlier this year.”
The Bank’s figures for unsecured lending showed consumer credit rose by £205m in July, down from a £378m increase in June and the lowest level since January. Credit card lending rose by just £259m, while borrowers repaid £54m of other loans and advances.
Posted in Borrowing & debt, Business, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Remortgaging, UK news | Comments Closed
Saturday, August 27th, 2011
More than half the UK’s regions are now ‘blackspots’ for mortgage wannabes. Mark King looks at the knock-on effects for the entire market
Prospective homeowners continue to be forced out of the housing market, with “first-time buyer blackspots” covering seven out of 11 regions in the UK and half of all UK tenants expecting rents to rise in the next year.
According to property website Rightmove, only 23% of people who intend to purchase a property in the next 12 months are first-time buyers, when 40% is considered normal for a healthy housing market. This drops to 17.6% in the south-west and Wales and is below 20% in five other regions across England and Wales: Scotland, the south-east, East Anglia, East Midlands, Yorkshire and Humberside.
The website said the three top reasons were difficulties in raising a deposit (exacerbated by steep rental price increases); concerns over financial security (one in five first-time buyers said they were worried about meeting mortgage payments); and over-priced property values – a worrying seven out of 10 prospective first-time buyers told Rightmove they feel property is over-priced in their area.
The emergence of these blackspots, along with stalling wage growth, redundancies and stagnant mortgage approvals are pushing would-be buyers into the rental sector.
But in a report, to be published on Monday 29 August, Rightmove found more than half of people now renting expect their rent to be higher in 12 months’ time, with one in six of those believing it will rise by more than 10%. This comes on the back of a 4.2% rise in rents, according to LSL Property Services, over the year to the end of July, taking the monthly average to £705 (7.1% to £1,009 in London).
Despite rising rents, there is now more than twice as much rental demand for 12% fewer properties compared with April 2009, helping inflate the rental bubble.
Miles Shipside, director of Rightmove, said conditions for tenants continues to deteriorate, with inflation running at 4.4% and wage growth of 2.2%. He said: “Tenants’ pain is a landlord’s gain with a shortage of rental accommodation and continuing high demand further boosting landlords’ returns. The rental ceiling of what some tenants can afford appears to have some headroom left, despite disposable incomes being squeezed. While competition will help improve landlords’ rental returns, there are consequences to an over-inflated rental bubble.”
First-time buyers perform an essential function in the housing ladder by starting chains that help others to move. Shipside says this is now under threat: “The emergence of so many first-time buyer blackspots has serious implications not just for those who are unable to buy for the first time, but also housing markets in each of those regions. It is particularly bad news for first-time sellers, for example.”
Owner occupation rates peaked in 2003 at 70.9% after an 80-year period of growth, and have since declined to a level of to 67.4% in 2009-10 (the latest figures available). The growth in home ownership rates have now stalled, which is less an inevitable flattening out of a market that is close to its natural capacity and more a generational story that is not being told.
Matt Griffiths of first-time buyer website PricedOut said there is now a definite split in the age groups of those who own their own home. Between 1991 and 2009-10, owner occupation levels in the 16-24 age group fell 61% (36% to 14%), while owner occupation in the 25-34 group fell by 30% (67% to 47%). Home ownership in the 35-44 group also fell, by 14% (78% to 67%). But levels of owner occupation continued to rise in older groups. Between 1991 and 2009-10 the 65-74 group saw a 14% increase in home ownership (62% to 79%), while those aged over 75 saw home ownership rise by 38% (53% to 73%).
The percentage of young people getting a foothold on the housing ladder today is are clearly falling behind the number who managed it 20 years ago. Griffiths argues this decline is exacerbated by the growth of the private rented sector, with the rise of the buy-to-let market enabling those with existing housing wealth to “out-bid” potential first-time buyers for property.
The growth of the private rented sector is projected to continue to increase to 20% of households in 2020, according to the National Landlords Association, from 14% of households in 2008.
Griffiths says: “Unfortunately the unenviable position of generation rent is reinforced by the political dynamics of home ownership – older homeowners are a larger group, vote more and are much more vocal in defending their interests. Politicians therefore have been very reluctant to challenge the generational inequalities in the housing market and tiptoe round the problem.”
The statistics all indicate that government initiatives are desperately needed to help buyers get a foothold, but the FirstBuy scheme has been roundly criticised for assisting only a small number of first-time buyers.
“The government’s flagship first-time buyer scheme – FirstBuy – is a classic example of how to do close to nothing with maximum publicity,” Griffiths says. “It will only benefit 10,000 young people and will have no impact on the drivers creating generation rent. Nowhere is this more apparent than in the response to the credit crunch – where stopping house prices falling has been a major concern of government and the Bank of England. The pain of market readjustment is therefore now being felt primarily in the rental market – with younger people shouldering higher costs. Given this group was the major loser from the boom, this seems a bit unfair.
“Over the longer term, there appears to be a seriousness from some in the coalition to deal with lack of new homes via planning reform – and they will face stiff opposition from the grey vote even here. But the government seems to have implicitly accepted that, for the time being, there will be a lost generation of young homebuyers.”
Posted in Borrowing & debt, Business, Communities, House News, Housing, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Real estate, Renting property, Society, The Observer, UK news | Comments Closed
Thursday, August 18th, 2011
CML says housing market is ‘subdued but stable’ as lending falls 1% from June to July
Gross mortgage lending fell marginally in July, dropping 1% to £12.6bn from the £12.68bn advanced in June, according to latest figures from the Council of Mortgage Lenders (CML).
It also fell by 6% in July compared to the same month in 2010, when lending reached £13.3bn.
The organisation said the housing market would continue to stagnate. CML chief economist Bob Pannell said: “UK interest rates look like staying lower for longer. Housing market conditions remain subdued, but pretty stable. Seasonal factors continue to provide some support, but underlying house purchase activity may drift lower over the coming months.”
Chris Gardner, director of mortgage broker Obligo, said the figures were cause for “limited cheer”. “With both a month-on-month fall and an annual drop in gross lending, the nation’s mortgage debt mountain is slowly being whittled away.
“We’re seeing some luckier borrowers make the most of low interest rates as an opportunity to pay off their mortgages more quickly. And with so few new mortgages being granted, the industry is not replenishing the loans which are being paid off.
“As many of their customers leave faster than they can be replaced, mortgage lenders are running flat out just to stand still. So while this is bad news for lenders as they chase such low levels of demand, it can only be good news for the economy.
“As consumers slowly shed their debt millstones there’s an outside chance consumer confidence will improve, and a consumer-led recovery is still the best, or even only, chance for the economy to pick itself up off the floor.”
Earlier this week, Moneyfacts said the average mortgage arrangement fee has increased by £151 over the past year, a rise of 17%. In August 2010 the average fee was £879, but today it stands at £1,030.
The highest fee on the market is £3,800, charged by Accord Mortgages (through selected intermediaries), while Precise Mortgages charges the highest percentage arrangement fee at 2%. Only 357 (or 12%) of mortgages have no arrangement fee.
Michelle Slade from Moneyfacts said: “Lenders appear to be offsetting the low mortgage rates on offer by increasing the arrangement fees, as lenders battle it out to offer the lowest headline rate.
“Percentage fees have become increasingly common, with one lender charging as much as 2%. Unfortunately, too many borrowers still focus their initial attention on getting the best rate without taking full consideration of the true cost of the deal.
“In many cases a low rate with a high fee can work out more expensive than opting for a slightly higher rate, but with a lower fee. The key to deciphering the maze of thousands of mortgages and getting the best deal is for borrowers to do their homework and shop around.”
Richard Sexton, director of e.surv chartered surveyors, said: “July’s subdued figures confirm that June was just a fleeting uptick. The banks have pushed out well-publicised high loan-to-value (LTV) products over the summer, but appearances can be deceptive.
“In practice, lenders are being forced to target low LTV borrowers – fewer than 10% of approvals in July were for those needing high LTVs. There is a discernible gulf between interest rates on low LTV deals, which are tantalisingly cheap, and the more restrictive rates on deals at 90% LTV and above.
“As a result, great swathes of lower income buyers are marooned in the rental market while the lowest rung of the property ladder hovers just out of their reach.”
CML members collectively cover 94% of all residential mortgage lending in the UK. There are currently 11.3m mortgages in the UK worth more than £1.2tn.
Posted in Banks and building societies, Business, First-time buyers, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, UK news | Comments Closed
Wednesday, August 10th, 2011
The Council of Mortgage Lenders reports a 22% increase in mortgages for house purchases since May, but the figure remains 11% lower than a year ago
The mortgage market picked up in June as the number of first-time buyers and home movers increased, figures from the Council of Mortgage Lenders (CML) showed. However, the number of home loans remained low by historical standards.
The CML figures show 46,700 mortgages were advanced for house purchases during the month – an increase of 22% on May’s figure but down 11% year-on-year. The value of the loans also increased over the month from £5.9bn to £6.7bn.
Of these loans, 18,100 were made to first-time buyers. This figure was up 24% on May but was 8% lower than June last year. Home movers accounted for 28,600 loans – up from 23,800 in May, but down from 32,800 in June 2010.
The figures took the number of mortgages advanced for house purchase in the second quarter of the year to 122,000, compared with 97,200 in the first quarter and 138,300 in the same period last year.
Remortgaging remained unchanged over the month, with 30,700 loans worth £3.8bn advanced to borrowers. However, this figure is up 1% by volume and 9% by value on the same month last year – perhaps as a result of some good mortgage deals and borrowers’ fears that an interest rate rise might be on its way.
The CML’s director general, Paul Smee, said: “Whilst there are clearly financial uncertainties ahead, it is encouraging to see more house buyers surfacing at the start of summer.
“Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while.”
However, Howard Archer, chief UK economist at IHS Global Insight, pointed out that June is normally a strong month for homebuying and the figures remained muted compared to long-term trends.
“While there are signs that housing market activity has edged up from its lows recently, it remains very low compared to long-term norms and we see no reason to change our view that house prices are likely to fall by around 5% overall from current levels measure by mid-2012 in the face of persistent troublesome economic fundamentals.”
He added: “Indeed, the current sell-offs in financial markets and growing fears of a renewed serious global economic downturn are unlikely to do much for consumer confidence and willingness to commit to buying a house in the near term.”
For those who are still confident enough to take out a mortgage, recent days have brought a flurry of cheap deals, with Moneyfacts reporting that for the first time in 13 years the average cost of a five-year fixed-rate loan has fallen below 5%.
Nationwide building society has cut the cost of its two- and three-year fixed-rate mortgages, with all two-year deals reduced by 0.25% and 0.5% taken off some of its three-year deals.
The society’s two-year fixed-rates now start at 2.64%, while three-year deals start at 2.89%. But to get those rates customers must pay a £900 product fee.
Posted in Business, First-time buyers, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Remortgaging, The Guardian, UK news | Comments Closed
Wednesday, July 20th, 2011
According to the CML, gross mortgage lending was up 16% last month, but was 3% down on June 2010
Gross mortgage lending was up £1.8bn in June, a 16% increase on the previous month – but remained 3% lower than June 2010, according to Council of Mortgage Lenders (CML) figures.
It takes gross lending for the second quarter of 2011 to an estimated £33.5bn, an 11% increase on the first three months of 2011 (£30.1bn) but a 3% decline on the second quarter of 2010, when lending reached £34.4bn. Lending for the first six months of the year reached £63.7bn, only slightly below the first six months of 2010 (£64.1bn).
The CML figures are estimates based on lending figures provided by a sample of lenders that represent around 80% of the mortgage market. They are a reasonably reliable early indication of official Bank of England lending figures that are published later in the month.
CML chief economist Bob Pannell put the year-on-year monthly drop in lending against a backdrop of the UK economy continuing to experience disappointing economic growth, strong consumer price pressures, falling disposable incomes and an uncertain jobs market.
He said: “This backdrop weighs negatively on purchase decisions relating to home ownership. By contrast, landlord activity appears to have picked up recently and, with evidence of strong rental demand, this should help to underpin activity over the coming months.
“UK households have made progress in bringing down debt burdens over the past year or so, but this largely stems from the restricted levels of new mortgage lending, unsecured write-offs and nominal income growth. Households in aggregate are not repaying their mortgage debt more quickly.
“Recent emotive headlines on repossession prospects appear overplayed, given that the state of our economy does not warrant large interest rate rises for the foreseeable future. But we do expect to see moderately higher arrears and possessions through the second half and into 2012, as we have previously forecast.”
Matt Hutchinson, director of flat and house share website Spareroom.co.uk, questioned whether lending levels would ever reach the highs of 2008, before the credit crunch hit. He said: “There has been a paradigm shift within the property market. Not only, for many people, is property simply unobtainable due to the size of deposit and impeccable credit history now required, but more fundamentally it no longer holds the attraction it once did.
“For many people, property ownership is increasingly associated with financial risk rather than financial stability — and it’s a risk they are less inclined to take. The result is an explosion within the rental market, with competition for rental property higher than ever and rents going through the roof.
“Mortgage volumes remain very low by historical standards but the question is, will they ever return to their former levels?”
Posted in Business, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Real estate, UK news | Comments Closed
Monday, July 11th, 2011
Mortgage finance is tight with low numbers of first-time buyers, the CML says, while renters experience high demand
Lenders’ continued reluctance to grant mortgages to first-time buyers is putting pressure on the rental market and leading to a scramble for rooms, according to research from flatsharing website EasyRoomate.
It said four tenants were competing for each room available to rent in the UK, with the number soaring to more than 13 in some areas of the country.
The claim comes as figures from the Council of Mortgage Lenders (CML) show a continued dearth in the number of first-time buyers entering the housing market. In May, 15,900 loans were granted to first-time buyers – a fall of 2.5% on May 2010′s figure and well below the numbers recorded in 2006 and 2007 when the housing market was at its peak.
The CML said first-time buyers were now borrowing an average of 80% of a property’s value, with just 3% taking an interest-only mortgage to get a foot on the housing ladder compared with 30% before 2008.
Nicholas Leeming from property website Zoopla.co.uk said: “Lending levels are slowly heading in the right direction, but the key problem is the lack of change in the number of loans for first-time buyers.
“Lenders still have a tight grip on the market and this is preventing these buyers from instilling the energy the property sector so desperately needs.”
EasyRoomate said frustrated first-time buyers were turning to flatshares in a bid to save enough money to put down a deposit on a property. Last week, figures for England showed private rents were soaring as rental demand increased.
Its analysis of 86,000 room rentals around the country, and 30,000 flathunters’ profiles, shows the number of tenants to each room has increased from 3 to 4.1 over the past 12 months. In Brighton the figure rises to 13.3, while in Cambridge there are 10.5 prospective tenants for each available room.
Demand in these hotspots means landlords can charge high rents, with tenants in Brighton paying an average of £419 a month, and those in Cambridge paying £430, compared with a national average of £370. Unsurprisingly, London had the highest rents with an average of £520 a month.
Jonathan Moore, director of EasyRoommate, said: “In rental hotspots like central London, rooms and flats being let within hours of being advertised.
“As the cost of renting a whole flat soars, a growing number of frustrated buyers are turning to flatshares as a cheaper alternative while they save for a deposit.”
Although first-time buyer numbers were down in May, the CML said the overall number of mortgages for house purchases had increased by 1.7% from April to 41,500; however, this was down 5% on last May’s figure.
The combined value of May’s lending for purchases was £5.9bn compared with £6.3bn in May last year.
Meanwhile, remortgaging activity picked up slightly during the month, with 29,000 loans worth £3.6bn advanced by lenders. This was higher than in May last year, but beneath March’s peak of £4.1bn.
The CML said 62% of borrowers opted for fixed-rate mortgages in May, when uncertainty over interest rate movements was heightened. In May last year 46% of new borrowing was done on fixed rates.
The CML’s director general Michael Coogan said: “Over the coming months seasonal factors are likely to push up lending for house purchase. There is no evidence of any drastic changes on the horizon or any significant shifts in direction for the mortgage market. These stable conditions are expected to continue for the rest of the year.”
However, Coogan added that investors were beginning to regain their confidence in bonds backed by mortgage assets, improving funding for lenders.
Leeming called on them to pass this on to would-be buyers. “Lenders should view the return of the securitisation market as a signal to blow the dust off their ledgers and lend more earnestly, because without a positive move from the lending community the property market will remain in the doldrums,” he said.
Posted in Business, First-time buyers, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Renting property, UK news | Comments Closed
Tuesday, July 5th, 2011
The latest data shows that fewer people than ever are buying their own home. Find out how the English housing market has changed
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Is this the end for Margaret Thatcher’s property-owning democracy?
The latest data from the Department for Communities and Local Government (DCLG) shows how the recession has altered the housing market. It shows that owner-occupation has declined from 14.8m (71%) in 2005 to 14.5m (67%) in 2009-10 as mortgages get harder to apply for and pay freezes become commonplace.
They also show that private renting is up – a dramatic increase of 56% since 2004-05 to make up over 20% of households in England.
The figures give us a complete insight into the nature of households across the country:
• The average weekly rent in 2009-10 was £156 for private renters, compared with £75 for social renters.
• 33% of private renters had lived in their home for less than a year, compared to 2% of owner-occupiers and 8% of social renters.
• An estimated 630,000 households (2.9%) were overcrowded, with over a third of these households (237,000) living in London (7.8% of London households). Some 7.9m households (37% of all) were under-occupying their accommodation.
• Only 4% of owner occupiers were recent first time buyers (bought within the previous three years), with the majority of these (61%) being aged between 25 and 34.
• Over two-thirds (68%) of new households formed in 2008-09 and 2009-10 were living in the private rented sector
But the big story is the rise of the private rented sector and the decline in the mortgage – while people paying off their mortgages and owning their homes outright are also at a record high.
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Posted in Blogposts, First-time buyers, guardian.co.uk, House News, Housing, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Renting property | Comments Closed
Friday, July 1st, 2011
Housebuilder expects to beat City profit forecasts this year as mortgage lending constraints ease
Taylor Wimpey was upbeat about the housing market on Thursday, citing a gradual improvement in the availability of mortgage finance.
The housebuilder reported stronger margins and said that it expected to beat City profit forecasts this year as the market continues to stabilise.
There are signs that confidence is gradually returning, although mortgage approvals remain weak. Nationwide reported that house prices were flat across the country in June, standing at an average of £168,205. The London-focused builder Berkeley Group said last week it would return £1.7bn to shareholders over the next decade after annual profits rose by almost a quarter.
Pete Redfern, Taylor Wimpey’s chief executive, said that he saw signs of “incremental” improvement in mortgage lending.
He explained: “The word ‘incremental’ is important. Valuations are little bit easier and we’re seeing a little more competition from specialist lenders. For most of the banking sector, balance sheets are slowly improving. There’s no big sea change but the mortgage market is slightly freer than it was six months ago.”
Taylor Wimpey expects to complete 4,550 homes in the first half of the year against 4,804 homes a year ago, as it chases margins over volumes. The average selling price nudged up to £170,000 from £168,000 a year ago. The company has sold its North American division to focus on the UK and slash debt from £800m to below £200m.
Steve McGuckin, UK managing director at the project and construction consultant Turner & Townsend, said: “Although developers are increasingly committing to new schemes, with the exception of the capital there are still real concerns about the direction of the market. With the odd exception, the residential property market outside London is continuing to decline, which will naturally disincentivise developers to develop and banks to lend. There continues to be an appetite among the banks for new prime developments in the capital, but outside the opposite is the case.”
However, Redfern thought talk of an increasingly polarised country was overdone. He admitted Taylor Wimpey’s housebuilding was weighted 60-40 in favour of the south-east, but pointed to schemes in Scotland, northern England, the Midlands and Wales.
“I don’t think the gap is growing quite as widely as people believe. There is a gap, but there has always been a gap.”
The group has recruited Mike Hussey, a former Land Securities executive, whose vehicle Almacantar recently bought the Centre Point and Marble Arch towers in London, to its board as an independent director, following the appointment of Kate Barker, the housing expert and former Bank of England rate setter, in April.
Posted in Business, Construction industry, House News, House prices, Housing, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Real estate, Society, Taylor Wimpey, The Guardian | Comments Closed
Wednesday, June 29th, 2011
Marginal rise in home loan approvals underlines market’s weakness and represents 7% fall year-on-year, latest Bank of England figures show
The number of loans approved for house purchase edged up by 1% to 45,940 in May after dipping to a four-month low of 45,447 in April, according to Bank of England figures.
Some economists said it was notable that mortgage approvals in May were still below March’s level of 47,345 loan approvals, because a rebound was expected following subdued April figures caused by the extra bank holiday for the royal wedding and a late Easter. The May figure also represents a 7% year-on-year fall.
The Bank of England also reported that net mortgage lending rose £1.1bn in May, up from £1bn in April but low compared to long-term norms. This is the consequence of both current low mortgage activity and a desire of a significant number of homeowners to reduce their debt by paying off more of their mortgages.
The number of approvals for remortgaging also increased only marginally, by nearly 2% to 20,491, as the threat of an imminent rise in interest rates receded.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “A rise in the number of approvals for house purchase was always likely after the long bank holiday that was April, but the fact that there was only a slight increase in May underlines just how weak the mortgage market still is.
“A raft of insolvencies data over the past week and reports confirming that even the slightest rise in rates would tip many homeowners over the edge add to the feeling that a rise in bank rate is now unlikely to happen this year. Consequently, the remortgage market looks set to remain fairly flat as people bank on rates staying put.
“The UK economy is still very much in intensive care while the property market, with the exception of London, is falling further into the red. Throw in the ongoing drama that is Greece and it’s no surprise that prospective buyers are ultra-cautious.”
The Bank of England reported that unsecured consumer credit rose by just £200m in May, while credit card lending rose by £34m – the lowest increase for 13 months.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Consumer appetite for taking on new borrowing clearly remains limited while there is also an ongoing desire of many consumers to reduce their debt.
“Consumer desire to get a tighter grip on their finances is a reflection of current very low consumer confidence and is the consequence of an uncertain and somewhat worrying longer-term outlook for the economy and jobs as the major fiscal squeeze increasingly kicks in.
“Still significant concern that interest rates could start rising before long is a further incentive for consumers to try to limit their borrowing and improve their finances. Even a small rise in interest rates could cause trouble for many people.”
Posted in Borrowing & debt, Business, Consumer spending, Credit cards, Economics, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgage rates, Mortgages, News, Property, UK news | Comments Closed
Thursday, June 23rd, 2011
Latest figures from the BBA show a decline in remortgaging as the likelihood of an interest rate rise recedes
Britain’s banks have reported a big drop-off in remortgaging activity as expectations of an interest rate rise begin to fade.
The British Bankers’ Association (BBA), whose members account for two-thirds of all UK mortgage lending, said its figure of 21,519 approvals for remortgages in May was well down on the average of 24,571 for the previous six months.
The figures contradict those from the Council of Mortgage Lenders, which earlier this week said remortgaging had supported a rise in gross mortgage lending in May.
House purchase approvals were slightly higher than in April, rising to 30,509 from 29,747, but remained 15% lower than a year ago. The average value of £147,700 was 1.9% lower than May 2010.
Many homeowners were prompted to seek fixed-rate mortgages earlier this year amid expectations of an imminent rise in the Bank of England’s base rate. But recent economic uncertainty now means many economists are not expecting rates to rise until next spring.
The BBA said gross mortgage lending was largely stable, but with homeowners stepping up repayments amid the low interest rate environment net mortgage lending increased by just £1.2bn in May.
Demand for loans and unsecured borrowing, meanwhile, has remained weak, with repayments continuing to outweigh new lending while the squeeze on household finances meant deposits and savings rose by just £100m compared with £800m in April and an average of £1.9bn over the previous six months.
BBA statistics director David Dooks said: “Consumer spending was flat in May after the boost Easter and the royal wedding provided in April. Money is still tight and people continue to pay off debt rather than save or borrow.”
Posted in Business, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Remortgaging, UK news | Comments Closed
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