Posts with tag: mortgage approvals

Mortgage Approvals Drop to Lowest Level in 9 Months, BoE Data Shows

Published On: August 1, 2017 at 8:04 am

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UK mortgage approvals dropped to the lowest level for nine months in June, signalling a loss of momentum in the housing market, the latest data from the Bank of England (BoE) shows.

Mortgage Approvals Drop to Lowest Level in 9 Months, BoE Data Shows

Mortgage Approvals Drop to Lowest Level in 9 Months, BoE Data Shows

There were 64,684 approvals in June – the lowest figure since September 2016 and down from 65,109 in May.

Howard Archer, an Economist at the EY ITEM Club, comments on the statistics: “The fundamentals for house buyers are likely to remain weak over the coming months, with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth.”

Some analysts believe that uncertainty over Brexit could also dampen the home purchase market.

“Approvals look set to decline further in the second half of this year, as lenders tighten the credit taps and households become increasingly cautious about making major financial decisions,” says Samuel Tombs, of Pantheon.

Meanwhile, consumer credit growth, which has caused concern among regulators in recent months, fell slightly, according to the Bank’s figures.

The annual rate of growth dropped to 10% – down from 10.4% in May, having peaked at an 11-year high of 10.9% last November.

Nevertheless, analysts said that the growth rate remained very strong by historical standards.

Ruth Gregory, of Capital Economics, notes: “This will clearly do nothing to allay policymakers’ fears that unsecured credit is growing too quickly.”

The latest Office for National Statistics (ONS)/Land Registry figures show that house prices rose by an average of 4.7% in the year to May, slipping from 5.3% in April.

In June last year, prices were growing at more than 8%.

Other indices from Halifax and Nationwide also show declines in growth in the wake of June 2016’s EU referendum.

Before the Brexit vote, the Treasury forecast that house prices could be between 10-18% lower by 2018 than otherwise if we voted to leave the EU.

ICA-JL-VOTE-FOR-US

Mortgage Approvals Hit Eight-Month High

Published On: January 5, 2017 at 10:15 am

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Mortgage approvals for house purchases hit an eight-month high in November, according to the latest figures from the Bank of England (BoE).

Some 67,505 mortgage approvals were recorded in November, up from 67,371 in October and the highest number seen since March, when the figure reached 70,079. It is believed that the peak witnessed in March was the result of a rush of investors hoping to beat the introduction of the 3% Stamp Duty surcharge for additional homes in April.

Mortgage Approvals Hit Eight-Month High

Mortgage Approvals Hit Eight-Month High

Despite November’s high number of mortgage approvals, the level was still down on an annual basis, from 70,123 the previous year.

However, the value of lending was higher in November, at £12.3 billion, up from £11.8 billion in October and £12 billion in November 2015.

The Director of Edinburgh Mortgage Advice, Mark Dyason, considers the cause of the increase: “There is a growing sense among existing UK homeowners that the first rate rise for a very long time could be on the horizon. More recently, this feeling has been compounded by the quarter point hike in the US in December.

“Most people now accept that rates are unlikely to get any better and are taking action to lock in to the competitive rates that are still, for the time being, available.”

He continues: “The sense that time is running out on the best rates, coupled with a general softening in prices, especially in prime areas of the country, has kept the market ticking over.

“Ironically, the ongoing uncertainty around the full impact of Brexit has spurred many people into action.”

He concludes: “The philosophy many people have adopted appears to be one of take action now while conditions are at least in their favour.”

But are landlords continuing to buy properties for rent? The latest data from the Council of Mortgage Lenders, which reveals that the number of landlords in mortgage arrears has hit a two-year high, suggests that too many investors have locked into purchases that they cannot afford.

At a time when tax and legislation changes are shaking the private rental sector, it could be a good idea for investors to hold back on purchases before assessing what the future will hold for their portfolios.

With mortgage approvals high across the house purchase sector, it looks that the general property market is still holding strong.

Mortgage approvals fall during October

Published On: November 24, 2016 at 2:40 pm

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The most recent statistics from BIBA show that there has been a 10% year-on-year fall in the number of house purchase approvals year-on-year to October 2016.

For remortgaging approvals, levels stayed constant to those in October 2015. There has however been more growth in the last ten months.

Mortgage borrowing

Gross mortgage borrowing levels for October 2016 stood at £12.2bn, 4% lower in October 2015. Net mortgage borrowing increased by 2.5%.

Matt Andrews, Managing Director of Bluestone Mortgages, noted: ‘An annual decrease in mortgage approvals reflects a more cautious approach from lenders, likely as a result of the current uncertainty in the housing market and wider economy. However, fewer-approvals and the continuing squeeze on affordability is pricing an increasing number of would-be homeowners out of the market.’[1]

‘The borrowers who are set to suffer the most under these conditions are those who do not fit traditional high-street lending criteria. Automated credit scoring models seldom take into account the nuances often found in the credit profiles of contractors, the self-employed, or those with adverse histories,’ Andrews continued.[1]

Mortgage approvals fall during October

Mortgage approvals fall during October

Concluding, Mr Andrews said: ‘Yet the UK workforce is changing-contractors have grown by 35% in the past three years alone. If more lenders were to offer a more personalised underwriting experience, working to understand the factors behind an individual’s circumstances, we would see an increasing number of hopeful buyers achieve their goal of homeownership.’[1]

[1] http://www.propertyreporter.co.uk/finance/october-sees-mortgages-dr0p-by-10-year-on-year.html

 

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Published On: July 27, 2016 at 10:59 am

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Mortgage approvals dropped to a 15-month low in June amid concerns over the Brexit vote, according to figures from the British Bankers’ Association (BBA).

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Mortgage Approvals Drop to 15-Month Low in Brexit Month

Data from the trade body shows that mortgage approvals for house purchase fell from 41,842 in May to 40,103 in June, while net lending dropped from £1.6 billion to £1.3 billion over the same period.

On an annual basis, the number of approvals is 11% lower. However, in the first half of the year, approvals were 5.5% higher than in the same period of 2015.

Although the number of mortgage approvals was down, the total value of loans was up, with gross mortgage borrowing of £12.2 billion in June, up by 4% on the same month last year. Borrowing for the first six months of 2016 totalled £79.9 billion, which is up on the £63.6 billion recorded in the same period of 2015.

The Chief Economist at the BBA, Dr. Rebecca Harding, comments: “This month’s high street banking data reflects the uncertainty that was felt ahead of the EU referendum. Business borrowing in June dropped for the first time in 2016, signalling that investment decisions were being delayed until after the vote.

“Mortgage lending and approvals also fell back in June, but remain above the low levels seen in April following the introduction of the Stamp Duty surcharge.”

Andrew McPhillips, the Chief Economist at Yorkshire Building Society, also responds to the data: “These figures show that homebuyers chose not to postpone getting on the housing ladder, despite uncertainty around the EU referendum. That said, it’s important to note that increases in lending are not solely influenced by movements in demand, but also by house prices.

“Current levels of house price inflation are putting upwards pressure on the size of the loans people are taking out, which is, in turn, driving up mortgage lending. There was a 4.9% monthly increase in property transactions in June, according to HMRC, and the fact that lending is increasing on a much steeper scale shows how house price increases are affecting the mortgage market.”

He continues: “Looking at the long-term trends, property transactions are actually down by 10.2% on last year, compared with a 4% increase in lending over the same period. The consequence of increasing house prices is that many people are being pushed out of the market due to the amount of money required to get on the property ladder.

“There is a clear need for more homes to be built, which should act to reduce house price inflation and help to make homes more affordable.”

Positively, however, the latest figures from housebuilder Taylor Wimpey show that customer interest in new homes remains strong, despite uncertainty surrounding the Brexit vote. If the firm continues to build homes at the current rate, housing supply should increase significantly, relieving the pressure on the property market.

Mortgage Approvals Drop in April after Stamp Duty Surge

Published On: June 1, 2016 at 11:09 am

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The amount of mortgage approvals for house purchase dropped in April following the surge in transactions ahead of the Stamp Duty changes, according to the latest Money and Credit report from the Bank of England (BoE).

Mortgage Approvals Drop in April after Stamp Duty Surge

Mortgage Approvals Drop in April after Stamp Duty Surgeand Credit report from the Bank of England (BoE).

In April, 66,250 loan approvals for house purchase were recorded, down from an average of 71,075 for the previous six months.

However, the number of approvals for remortgaging stood at 40,510 in April, broadly in line with the average over the previous six months.

The number of approvals for other purposes rose in April, up to 13,035 from an average of 12,425 for the previous six months.

As of 1st April, buy-to-let landlords and second homebuyers are charged an additional 3% in Stamp Duty. Our guide will help you understand how the higher tax rate will be implemented: /landlords-guide-3-stamp-duty-surcharge/

The Director of e.surv chartered surveyors, Richard Sexton, comments on the data: “After an extraordinary lift earlier this year, April saw house purchase approvals drop slightly, as activity in the lending market settled down. This natural slowdown follows the flurry in buy-to-let activity following April’s Stamp Duty deadline, but June’s referendum could also be causing temporary caution.

“Remortgaging remains strong however, with lenders offering a variety of new and increasingly flexible mortgage rates for existing homeowners. And it’s not just the remortgaging sector with a spring in its step; overall house purchase approvals may be down, but first time buyers are still very much in the game.”

He continues: “An increase in available mortgage deals is playing into the hands of first timers too, providing further choices and even inter-generational solutions. House prices continue to increase, but financial factors – particularly low inflation and rising wages – are helping first timers step onto the property ladder. Both factors have helped savings, and, with Government schemes such as the Lifetime ISA leading the way, there’s nothing to suggest first time buyer lending won’t go from strength-to-strength as we approach the second half of the year.”

Concerns aired over buy-to-let competition

Published On: February 26, 2016 at 12:06 pm

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With buy-to-let investors rushing to purchase property ahead of the stamp duty changes a little more than a month away, fresh concerns have been aired about the future of the market.

Mortgage approvals hit their highest ever level during January. The British Bankers’ Association revealed that its members approved 27% more loans last month than at the same period last year.

However, additional data from HM Revenue and Customs suggests the number of property sales didn’t keep pace, with a slide in transactions over the previous month.

Stamp Duty Changes

Following Chancellor George Osborne’s announcement of a 3% rise in Stamp Duty Land Tax for buy-to-let investors in the Autumn Statement, buyers have been flocking into the sector.

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘the start of 2016 has seen a significant rise in mortgage borrowing and it seems perfectly reasonable to attribute that to property investors trying to get in ahead of April’s tax changes.’[1]

‘These changes are not insignificant and will undeniably drive up purchase costs and are also being introduced at the same time as the scrapping of the wear and tear allowance which allows landlords to claim tax relief for keeping their properties in good condition,’ he continued.[1]

Concerns aired over buy-to-let competition

Concerns aired over buy-to-let competition

Bottleneck

Mr Jagota observed that, ‘anecdotally the industry is full of stories of a substantial number of homes stalled in the pre-completion stage and even a shortage of solicitors available to carrying out conveyancing.’ He went on to say that, ‘it’s clear we’re seeing something of a competition bottleneck. The real questions are whether or not buyers will persevere with the sales if their transactions are not completed when the tax changes come in. Will they take the hit, or will we see a spate of sales simply abandoned?’[1]

‘It’s more than likely that we will see demand from investors drop off after April, but this is unlikely to have a significant impact on the wider property market as residential buyers, particularly if first time buyers return to centre stage,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investors-warned-of-completion-bottleneck.html