BoE: Mortgage market remains stable

Michael Lloyd

November 29, 2019

home sales

The mortgage market remains stable, the latest Bank of England’s Money and Credit Statistics have found.

Net mortgage borrowing by households was £4.3bn in October, £400m higher than in September.

The annual growth rate was unchanged at 3.2%, close to levels seen over the past three years.

Mortgage approvals for house purchase, an indicator for future lending, fell slightly in October to 65,000, but remained within the narrow range seen over the past two years.

However, mortgage approvals for remortgage strengthened on the month to 51,000.

Rob Barnard, director of intermediaries at Masthaven, said: “The mortgage market has been broadly stable for the last three years, highlighting resilience amid ongoing political uncertainty.

“This is reflected in the approval rates, showing healthy movement within the lending market.

“However, the real story can be seen in the remortgage numbers which have continued to climb over the year.

“More and more homeowners are staying put to release funds in order to improve or even extend their properties and save themselves potential selling and moving costs in the long run.

“However, bridging or second charge loans could be more appropriate as they offer a shorter-term solution and limit the spread of the cost over the lifetime of the mortgage.

“Given the growth in remortgaging numbers, brokers would be wise to work with lenders who have a wide range of products in their arsenal to ensure they are offering the best option available to their customer.”

Andrew Montlake, managing director Coreco, pointed to the positives in the market.

He added: “For borrowers, the past few months have been one long Black Friday as the high street lenders compete for market share.

“Remortgage activity is especially strong, with rates on some 2 and 5-year fixes borderline obscene.

“Approvals for house purchase were down slightly but October was a particularly fraught month so that’s no surprise.

“Transaction levels are simmering by historical standards but given the environment we find ourselves in they are holding up well.

“The market is likely to remain in its current holding pattern until the New Year when we have more clarity on Brexit.”

John Phillips, national operations director, Just Mortgages, called for the next government to take action to get the housing market moving.

He said: “These figures – both the fresh data for September and the long-term trend – reinforce the impression that for the housing market the engine is ticking over, but not really going anywhere.

“In two weeks’ time we’ll all be waking up to a new government. Whichever party – or parties – are in charge need to take action to get the market motoring.

“That includes getting some certainty over what’s happening with Brexit, but also real action to reform planning and taking a fresh look at the current high levels of stamp duty.

“This is causing real bottlenecks at the higher end of the market, but the impact goes much further and affects availability if suitable properties for families right across the value chain.”

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