Financial News Archive

Mortgage Lending Strengthened in August, Reports UK Finance

Rose - October 16, 2017
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The latest UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier.

Mortgage Lending Strengthened in August, Reports UK Finance

Mortgage Lending Strengthened in August, Reports UK Finance

During August, first time buyers borrowed £5.7 billion – 16% more than in July and 12% up on August 2016. They took out 34,400 mortgages – 14% higher than the previous month and 9% higher on an annual basis.

Home movers borrowed £8.4 billion in August – 18% more than in July and 20% higher than in August last year. This equated to 38,500 loans – up by 17% month-on-month and 13% on August 2016.

Remortgaging by homeowners totalled £6.4 billion in August – 4% less than in July, but 8% higher than the previous year. The number of people remortgaging totalled 36,700 – down by 1% on July, but 5% up on August last year.

Buy-to-let lending totalled £3.1 billion in August – down by 3% on July this year and the same level as in August last year. This equated to 20,400 mortgages – the same as in July, but 4% higher than in August 2016.

The Head of Mortgages Policy at UK Finance, June Deasy, comments: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in Stamp Duty.

“Over the last 12 months, the number of people remortgaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

On a seasonally adjusted basis, borrowing by first time buyers and movers increased by both value and volume. There was a decline in both the number of people remortgaging and the value of lending. The value of buy-to-let lending was unchanged, but there was a small decrease in the number of buy-to-let borrowers remortgaging.

The proportion of household income taken up by mortgage payments edged up for first time buyers in August (to an average of 17.5%), but was unchanged for movers (17.6%). Overall, it remains low by historical standards.

The average amount borrowed by a first time buyer rose from £138,999 in July to £140,035 in August. There was a smaller proportionate increase in the average first time buyer household income, up to an average income multiple of 3.63. The average amount borrowed by movers increased from £180,000 to £182,750, while their average income multiple rose to 3.40.

Remortgaging accounted for more than two-thirds (68%) of buy-to-let lending in August, however, it was 5% lower than in July. Borrowing for buy-to-let house purchase rose by 11%. Nevertheless, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher Stamp Duty rate last year.