The latest non-seasonally adjusted data from UK Finance shows that the number and value of loans for remortgaging and for house purchases rose in October, when compared to the previous month and the same period of 2016.
Capital and interest payments for new loans remain near record lows for both home movers and first time buyers, reflecting a competitive mortgage market.
The Head of Mortgage Policy at UK Finance, June Deasy, comments: “Over the last year, the number of loans for remortgaging has been at record levels; this trend looks set to continue further as we head towards the end of 2017 and borrowers seek to take advantage of low interest rates.
“Mortgage repayments as a proportion of income still remain at or close to their historic low point, and, despite the recent base rate rise, we can expect monthly mortgage payments to remain affordable for the vast majority of borrowers.”
Remortgaging Continued to Boom in October, UK Finance Reports
First time buyers
In October, first time buyers borrowed a total of £5.1 billion – up by 2% on September and 13.3% higher than in 2016. 31,700 loans were approved – up by 3.6% on the previous month and 10.5% on October last year.
Combined capital and interest payments as a percentage of first time buyers’ incomes remained stable, at an average of 17.2% – down by 0.1% on September and 0.4% on a year ago. The average loan-to-value (LTV) ratio rose slightly, by 0.6% on the previous month.
Home movers
Home movers borrowed £7 billion in October – up by 2.9% on September and 18.6% on an annual basis. There were 33,300 home movers – an increase of 5% on the previous month and a substantial 15.6% on October 2016.
Average combined capital and interest payments also remained stable, at 17.5% of income – unchanged on October last year. The average LTV increased slightly to 3.41, from 3.38 in September.
Remortgaging and buy-to-let
Homeowner remortgage activity totalled £7.3 billion – up by 15.9% on a monthly basis and 17.7% on October 2016. That equated to 41,100 remortgages – an increase of 16.1% on September and an annual change of 16.4%.
Buy-to-let remortgaging totalled £2.4 billion – up by 20% on September 2017 and October 2016. Remortgaging now accounts for just over 70% of all buy-to-let lending. There were 14,700 buy-to-let remortgages – up by 20.5% month-on-month and 21.5% when compared to last year.
Gross buy-to-let lending for house purchases totalled £900m – unchanged on September 2017 and October last year. This equated to 6,600 mortgages.
Harry Landy, the Managing Director of Enterprise Finance, responds to the figures: “It’s encouraging that appetite for lending has picked up again in October. After last month’s drop, the remortgage and buy-to-let markets are beginning to gain momentum, which reflects the fact that borrower confidence is high – even at a time of ongoing political and economic instability.
“However, although today’s figures are welcome, 2017 has been a turbulent year for the industry, so it’s important not to get carried away. What’s crucial to remember is that during times of wider economic uncertainty, consumers need more flexible financing to match their needs. This is where second charge mortgages and bridging finance comes in: for example, specialist finance can help fund a buy-to-let property when high street options for financing are turned down; increasingly, we are also seeing people take out second charge mortgages as an alternative to remortgaging.”
He adds: “Brokers need to be aware about what is available on the market, and there needs to be an improvement in education and awareness so that they can capitalise on market opportunities when they arise.”