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Archive for the ‘Remortgaging’ 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
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
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
Monday, June 20th, 2011
Figures from the Council of Mortgage Lenders show 12% increase on previous month, but this shouldn’t be seen as a sign of strength in the market
Gross mortgage lending was up £1.2bn in May, a 12% increase on the previous month and 1% higher than May 2010, according to figures published by the Council of Mortgage Lenders (CML).
The figures, which the CML treats as an early indicator for Bank of England lending figures and its own more detailed lending data published later in the month, shows a total of £11.3bn lent in May compared to £10.1bn in April and the £11.4bn lent in March.
However, the rise should not be regarded as an increase in the strength of the property market or an improvement in the number of first-time buyers: the CML says the increase was fuelled by remortgaging rather than house purchase, and adds that this is likely to dwindle going forward as expectations of an increase in interest rates recede.
CML director general Michael Coogan said: “Gross mortgage lending in May recovered after low activity levels in April. Distorting effects from Easter and bank holidays cloud the current picture, but the likelihood seems to be for essentially flat levels of lending over the next couple of months.”
Jonathan Moore, director of EasyRoommate, said: “Lending may have been up in May, but this is being driven by remortgaging activity rather than a sudden surge in the number of first-time buyers able to get a mortgage. For the vast majority of wannabe buyers, securing a mortgage remains the main hurdle to clear – and this shows no sign of getting easier any time soon.
“Lending to those who need the most help to purchase their first home is still woefully inadequate, and it’s no wonder that rents are being driven to all-time highs by the hundreds of thousands of frustrated buyers competing for rental accommodation.”
Howard Archer, chief UK economist at IHS Global Insight, said the sluggish mortgage lending figures underpinned his belief that house prices will fall by about 10% by mid 2012 from their 2010 peak. “The main support for house prices will come from the fact that interest rates are likely to remain very low compared to long-term norms for some considerable time to come, despite possibly starting to rise later this year.”
Posted in Business, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Remortgaging, UK news | Comments Closed
Tuesday, June 14th, 2011
Communities department says house prices fell by 1.1% in April, while the CML reports an increase in the number of loans for house purchases
House prices fell by 1.1% in April, reversing the 1.2% increase seen in March which was the only rise recorded so far this year, according to figures released by the communities and local government department.
The April decline means house prices fell by 0.3% over the year, and the average value of a property now stands at £204,439 – 3.9% below the August 2010 peak of £212,710.
However this hides a huge variation across the UK. Average prices remained unchanged during the year in England but decreased by -1.2% in Scotland, -1.4% in Wales and -15.2% in Northern Ireland.
Encouragingly, prices paid by first-time buyers were 1.6% lower on average than a year earlier, while prices paid by former owner-occupiers increased by 0.2%.
Predicting further good news for first-time buyers Howard Archer, chief UK analyst for IHS Global Insight, said: “We suspect house prices will end up declining by some 10% overall by mid-2012 from their 2010 highs. This implies that they will fall by around 5%-8% from current levels depending on which house price measure you take.”
Meanwhile, the number of mortgages lent for house purchase went up in April, but with house purchase approvals falling during the same month there is likely to be a lull in sales completions in the next few months.
The Council of Mortgage Lenders (CML) said the number of loans paid out for house purchases increased in April to 40,900 with a value of £5.9bn, up from 37,900 loans worth £5.5bn in March. But despite the slight increase, CML spokesperson Sue Anderson said Bank of England mortgage approval figures – loans granted for house purchase but not yet actually paid out – and estate agency activity are a better indicator of how the market is likely to perform in the next few months.
Latest Bank of England figures show the number of mortgage approvals fell by 4% to 45,166, the lowest ever figure for April since records began in 1992, while the Royal Institution of Chartered Surveyors have reported a lack of interest from potential buyers, a drop in agreed sales, and an edging down of house prices.
However, the CML said the number of mortgages lent to first-time buyers increased by 7% from 14,700 loans worth £1.7bn in March to 15,800 worth £1.9bn in April. This was an increase of 1% on April 2010.
First-time buyers, meanwhile, borrowed an average 80% of their property’s purchase price in April, marginally up from 79% in March 2011 and April 2010, but well below the 90% that first-time buyers typically borrowed before 2008.
For the second month running only 4% of first-time buyers took out an interest-only mortgage. Before 2008 the CML says it was typical for about 30% of loans to first-time buyers to be on an interest-only basis.
‘Future activity will be subdued’
Remortgaging fell in April, with 24,700 loans worth £3bn compared to 34,100 loans worth £4.1bn in March. The CML attributed this to a widespread expectation that interest rates will not rise in the immediate future. “With remortgage activity currently linked to expectations of interest rate movements, future activity will be subdued as an imminent increase in the bank rate is now looking less likely,” it said. “There was also a fall in remortgage approvals in April, so remortgage completions are likely to remain modest in the coming months.”
The low levels of lending are very bad news for mortgage brokers. But Brian Murphy of independent broker the Mortgage Advice Bureau said: “The CML are right that activity during April was muted because of the seemingly endless bank holidays and royal wedding, and this could impact completions in the next quarter.
“However, while activity is still at historically low levels given ongoing caution among both lenders and consumers, during May and the first half of June it switched back to pre-April levels.
“Remortgage activity, although higher than a year ago, has certainly plateaued as the likelihood of a rate rise this year decreases. The fact the May inflation data came in at the same level as April, rather than having risen further, has meant the Bank is under no extra pressure to raise interest rates.”
Posted in Business, First-time buyers, guardian.co.uk, House News, House prices, Housing market, Money, Mortgage lending figures, Mortgages, News, Property, Remortgaging, UK news | Comments Closed
Thursday, May 26th, 2011
BBA figures show declining mortgage and remortgage approvals, but a slight increase in gross lending
Mortgage approvals fell by 6% in April to 29,355, down from 31,205 in March and a steep fall of 18% on the 35,840 mortgages approved in April 2010, according to the British Bankers’ Association (BBA).
Seasonally-adjusted gross mortgage lending fell by 5% year-on-year in April to £7.9bn, but the figure is 1% up on March 2010, when lending totalled £7.8bn.
However, the non seasonally-adjusted figures paint a bleaker picture, showing a monthly fall of 10% in gross mortgage lending between March and April 2011.
The number of remortgage approvals in April were 12% lower than the previous month and 7% lower than in April 2010, while approvals for equity withdrawal continue to be “subdued” at 22% lower in April 2011 than April last year.
The BBA said that despite the weakness in both house purchase and remortgaging approvals, gross mortgage lending was “stable”: with repayments continuing at a fairly high level, net mortgage lending increased by £1.3bn in April.
The BBA also said net consumer credit rose by £47m in April, following a £29m rise in March. There was modest net borrowing of £228m on credit cards in April, while there was a net repayment of £181m in personal loans and overdrafts.
BBA statistics director David Dooks said: “Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a ‘wait and see’ attitude. However, banks are still able to meet the need for home loans, even though demand remains weak.”
Howard Archer, chief economist at IHS Global Insight, said mortgage approvals were now running at just above half the average monthly level of 57,644 seen since 1997.
“The relapse in mortgage approvals in April from an already low level reinforces our belief that modest falls in house prices are more probable than not over the coming months, as tighter fiscal policy and the possibility of gradually rising interest rates before the end of 2011 maintains pressure on the housing market,” he said.
He added that the consumer credit figures add to the overall impression that consumer appetite for taking on new borrowing remains limited, and there is 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 and falling 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,” he said. “Meanwhile, there remains limited availability of unsecured credit from banks, despite reportedly increasing slightly in the first quarter.”
Posted in Banks and building societies, Borrowing & debt, Business, Credit cards, guardian.co.uk, House News, Housing market, Money, Mortgage lending figures, Mortgages, News, Personal loans, Property, Remortgaging, UK news | Comments Closed
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