This morning, UK Finance released its gross mortgage lending figure for the month of July.
The organisation estimates that overall gross mortgage lending stood at £23 billion in July. Accounting for seasonal factors, this figure is above the average lending figures seen over the past year.
First time buyers and remortgage activity by homeowners have supported lending for some time, but UK Finance anticipates the pace of growth to slow slightly, dampened by a potentially more challenging economic outlook.
The UK Finance data also shows that consumer borrowing from high street banks remained stable in July, at 2%, compared to 1.9% in the previous month.
UK Finance Releases Gross Mortgage Lending Figure for July
Eric Leenders, the Head of Personal at UK Finance, comments: “Consumer borrowing from high street banks remained stable in July, as continued pressure on household budgets reduced spending and saving.
“It is business as usual for business lending, as companies continue to borrow less and build their reserves, increasing deposits at an annual rate of 7.5%, while larger corporates are using the capital markets for funding.”
He continues: “Steady levels of mortgage activity seen through the first half of the year continued into July. First time buyer numbers continue to be strong, helped in part by Government schemes. But that has been offset by home movers, where a shortage of homes on the market is limiting their activity.”
The Marketing Director of Foundation Home Loans, Jeff Knight, also says: “First time buyers and remortgaging have kept enough wind in the sails to support lending levels, despite the obvious challenges brought about by shifts in tax policy, Stamp Duty and lingering economic uncertainty.
“Looking longer-term, however, the changes in buy-to-let tax relief, alongside new underwriting standards, will bring additional strain. Landlords have already started streamlining portfolio sizes to avoid taking a hit and, while this is a wise choice for some, it’s equally important the rented sector offers choice and a positive option for tenants.”
Knight adds: “With the summer slowdown approaching and the PRA [Prudential Regulation Authority] regulation less than a month away, we need to ensure landlords are engaged with all the opportunities the market has to offer – and that includes support to help navigate the changes.”
Shaun Church, the Director of mortgage broker Private Finance, offers his thoughts: “Mortgage lending has grown over the past year, despite considerable political uncertainty, stagnant wage growth and house prices continuing to creep up: a testament to the enduring demand for property.
“First time buyer and remortgage activity continues to act as the market’s driving force, as borrowers seek to take advantage of the low rates on offer. Competition between lenders means borrowers have a growing number of competitive products to choose from.
“Not all segments of the market are performing so well, however, with the buy-to-let sector yet to recover from being bludgeoned by repeated regulatory changes. Properties at the upper end of the market continue to suffer the consequences of changes to Stamp Duty, restricting flow of movement in the market and contributing to the lack of new homes coming up for sale.”
The CEO and Co-Founder of buy-to-let specialist Landbay, John Goodall, concludes: “Mortgage lending levels are rising, chiefly because mortgage rates are currently at record lows, and both first time buyers and existing homeowners are taking the opportunity to lock in a good fixed or variable rate while they still can. The economic and political landscape is dampening suggestions we may see a base rate rise soon, but support for normalisation of monetary policy is growing. After seven years of rock bottom rates, we could soon see a volte-face from the Bank of England; one that will be felt by mortgage borrowers right across the UK.
“While the residential market is a hive of activity, the buy-to-let market is in a state of steady growth. The recent buy-to-let tax changes and new underwriting criteria have pushed some amateur landlords out of the market, but professional landlords are filling that void at the same pace. Indeed, we may yet see a spike in buy-to-let borrowing ahead of the PRA changes for portfolio landlords in October, as investors make changes to their portfolios before the stricter lending criteria take root.”