Gross mortgage lending down 4%

Michael Lloyd

July 24, 2019

Gross mortgage lending across the residential market in June 2019 was £21.9bn, some 4% lower than the same month in 2018, the UK Finance Household Update has found.

Remortgage approvals were 1.4% lower and approvals for other secured borrowing were 5.3% lower than the same month a year earlier.

John Goodall, chief executive of Landbay, put the figures down to political uncertainty.

He said: “Considering the swell of political uncertainty over the past few months, it’s hardly a surprise to see a further slowdown in mortgage lending.

“Would-be buyers will be forgiven for pressing pause on any decision without more clarity over the UK’s future direction.

“However, with Boris now in the hotseat, and promising Brexit by October, many may well consider making their property move between now and then to avoid any potential no-deal disruption.

“The truth is that we are in a buyers-market amid subdued house prices, decent wage growth and lenders with a genuine appetite to lend.

“Add to the mix low-interest rate conditions alongside stable inflation and it’s not hard to see why things could be looking up in the near term.”

However, the number of mortgages for home purchase approved by the main high street banks in June 2019 was 2.9% higher than in the same month in 2018.

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Encouragingly, the number of mortgages for home purchase rose in June compared with the same month last year, despite all the continued uncertainty over Brexit.

“Hopefully, the installation of a new prime minister at number ten will effect a positive change for the wider economy and housing market, although it is still very early days.

“Swap rates continue to fall, with a number of lenders, including Nationwide, NatWest and Accord cutting some mortgage rates in the past week. This downward pressure on pricing is likely to continue as lenders compete for business.”

Andrew Montlake, director of Coreco, said that the UK’s economic fundamentals remain strong but the effect of the Brexit countdown on confidence is likely to prove stronger in the months ahead.

He said: “A lot of people will also be waiting for any policy changes that could improve their position under Boris Johnson, especially in relation to stamp duty.

“We expect to see a pick-up in remortgage activity in August and September given that the likelihood of a no-deal exit from the EU has now ramped up significantly.

“People are bracing themselves for a period of potentially strong turbulence and locking into the lowest mortgage rates possible provides vital protection.

“While a number of home moves will always proceed out of necessity, we expect overall transaction levels to slow in the countdown to 31 October.

“With so many unknowns in play, many households will sit tight during the next two to three months.

“But this could be an expensive decision if the market rebounds as ‘no-deal’ proves to be not such a big deal after all.”

And Gareth Lewis, commercial director of property lender MT Finance, added: “The high street banks report an uplift in home purchase approvals but this may be because they’ve made these deals more attractive to attract more business on the back of a drop off in remortgaging activity.

“Deals are being done. A colleague recently sold his house, in the north of England, in two days and this wasn’t because it was priced too cheaply. There are people who are willing to get on and buy when an opportunity presents itself.

“Now we have one part of the political frustration out of the way, and know who is the new prime minister, we may find that there are benefits when it comes to tax and stamp duty.

“We don’t know how long it will take Boris Johnson to get round to looking at that – let’s face it, there are plenty of other matters to deal with first – but there may be measures afoot to stimulate the property market at some point.”

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