Mortgage borrowing slows in September

Ryan Bembridge

November 15, 2016

Mortgage borrowing slowed in September but was still higher than the same month last year, Council of Mortgage Lenders data shows.

In September month-on-month borrowing by value fell by 7% for homeowners, 4% for first-time buyers, 7% for remortgagors and 7% for buy-to-let landlords.

However year-on-year borrowing was up 4% for homeowners, 14% for first-time buyers, 8% for remortgagors and 22% for landlords.

Paul Smee (pictured), director general of the CML, described the situation as ‘steady’.

He said: “Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago. But lending for buy-to-let house purchase and remortgaging has settled at its current level over the last four months.”

Andrew Fisher, managing director of secured loan lender Freedom Mortgages, claimed the figures show the impact of the Brexit vote.

He said: “The drop in the number of completions clearly shows how borrowers reacted to the referendum result which was with caution and potential concern for the future of the UK housing market.

“We have now experienced a second consecutive month of mortgage completions fall and it will be interesting to see if lending trends in August will also drop, which will be a true indication of the impact of Brexit.”

Fisher hoped Chancellor Philip Hammond removes the 3% stamp duty surcharge for private landlords in the upcoming Autumn Statement, as is rumoured.

With the base rate being cut to 0.25% the amount borrowed as a percentage of household income to service capital and interest rates reached an historic low in September for first-time buyers and home movers, at 17.8% and 17.7%.

But Mark Harris, chief executive of mortgage broker SPF Private Clients, reckoned mortgage rates may start to rise again.

He said: “There is a potential blot on the horizon for borrowers in the form of rising Swap rates.

“This may feed through to higher mortgage rates in the short term, although the dip in inflation today may lead to another fall in Swaps.

“The advice to borrowers who have their eye on a cheap rate is to secure it while they can – they are so low anyway, it is unlikely to be a move you will regret.”

He added: “It was steady as she goes for September with borrowers getting on with it and securing mortgage deals at rock-bottom rates.

“The cut in base rate in August further pushed mortgage rates, which were already at historic lows, down further still and with lenders keen to do business before the end of the year, the flurry in cheap mortgage products looks unlikely to change anytime soon.”

Richard Pike, Phoebus Software sales and marketing director, felt the UK will experience a bumpy end of the year.

He said: “The internal politics in government regarding the process for leaving the EU is doing nothing to instil confidence, but it is something that we are all going to have to live with for a while.

“I think that low borrowing rates will mean the only area where we are likely to see growth in the coming months is in the remortgage market.”

“We are more than likely in for a bumpy finish to the year as movers and buyers grapple with rising house prices and the inevitable uncertainty surrounding our exit from the EU.”

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