Mortgage activity inches up

Ryan Bembridge

January 25, 2018

Mortgage activity crept up by 1.2% in December year-on-year, UK Finance figures show.

Gross mortgage lending reached £20.2bn in the month.

Eric Leenders, managing director of personal finance at UK Finance, said: “December is traditionally a quieter month for mortgages, although the underlying trend of increased numbers of first time buyers, supported by government initiatives such as Help to Buy, continues.

“Mortgage rates remain low, driven by a competitive market, so customers should shop around for the best deals.

“Business lending is up year-on-year, even though December saw the usual seasonal net repayment across all industries and sizes of borrower.

“However, healthy export levels and an uptick in overall business confidence suggest that in this New Year, there may be an appetite to capitalise on opportunities for growth supported by continued favourable borrowing conditions.”

Henry Woodcock, principal mortgage consultant at IRESS, was pleased with the news.

He said: “The market did not expect to see an increase in gross mortgage lending for December so this is welcome news.

“Mortgage approvals had been declining through the last quarter of 2017 and although approvals edged up to just over 65,000 in November, that was still 3,000 fewer than in November 2016.

“However, January usually sees a significant rise in approvals and industry sentiment among lenders and mortgage brokers is positive, with UK Finance forecasting a moderate increase in housing transactions and gross lending.

“The interim report of the FCA study into competition in the mortgage market is due this quarter and it will be interesting to see if that has any influence on the market during the rest of the year. “

He added: “I don’t expect a bumper year for gross mortgage lending.

“The December RICS residential survey saw buyer interest edging lower and they are predicting a relatively flat 2018.”

In November the government cut stamp duty for first-time buyers on property purchases up to £300,000.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The number of first-time buyers continues to be strong, which is excellent news for the overall health of the market.

“Government initiatives, coupled with lenders’ efforts to lend at higher loan-to-values at competitive rates, are proving attractive to those trying to get on the ladder for the first time.

“There is much speculation as to when interest rates will rise again but lenders remain keen to lend and there is more money available than people ready to borrow it, which will keep mortgage rates low at least for now.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These figures confirm is what we are seeing on the ground – in other words, lenders continuing to offer well-priced mortgages, particularly for first-time buyers keen to take advantage of the more level playing field with investors.

“This is encouraging as first-time buyers are the lifeblood of the market. They generally trade up after a few years whereas investors tend to buy at the lower levels and stay there.

“Looking forward, the numbers also bode well for 2018 if borrowers continue to take advantage of slightly more encouraging lending conditions.”

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