Mortgage lending in February up year-on-year

Michael Lloyd

April 17, 2018

Mortgage lending for first-time buyers, home movers and remortgagors increased in February 2018 compared to the previous year, UK Finance’s latest mortgage trends update found.

Total homeowner purchases, which combine both home movers and first-time buyers, reached 50,000, the highest level for February since 2007.

There were 25,200 first-time buyer mortgages completed in February 2018, some 2.4% more than in the same month a year earlier and the £4bn of new lending in the month was 2.6% more year-on-year. The average first-time buyer was 30 with a gross household income of £41,000.

Craig McKinlay, sales and marketing director, Kensington Mortgages, said: “Amidst the noise about the Bank of England’s next decision on interest rates, remortgaging levels continue to remain high as borrowers organise their finances before any potential rate rise.

“Prudent borrowers are now locking themselves into competitive mortgage deals that remain on offer through the mortgage market, whether it’s for two, three or five years.

“For those that haven’t yet looked at remortgaging, now is a good time to speak with a broker about securing a new deal whilst mortgage rates remain at their current near record lows.

“Seeking advice can make a world of difference in helping borrowers find a new mortgage that fits their needs, whether a mainstream customer, buy-to-let or those with more complex circumstances.”

There were 24,800 home mover mortgages completed in the month, the same as in February a year earlier. The £5.3bn of new lending in the month was 1.9% more year-on-year. The average home mover is 39 and has a gross household income of £55,000.

There were 35,400 homeowner remortgages completed in the month, some 11.3% more than in the same month a year earlier. The £6bn of remortgaging in the month was 11.1% more year-on-year.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ’These numbers are encouraging because they underline the fact that you write off this market at your peril.

“Buyers and sellers are showing, once again, that those prepared to negotiate hard are still getting on with their lives, albeit at slightly softer price levels.

“Encouragingly, first-time buyers are taking advantage of the abolition of stamp duty announced at the end of 2017, as well as a more level playing field with buy-to-let investors, with the latter’s numbers noticeably shrinking as revealed in this report.

“Although it is sometimes tough for first-time buyers, many are showing that they would prefer to buy rather than rent, although clearly many have no option unless they have help from the Bank of Mum and Dad.

“Looking forward, we expect more of the same – no boom or bust but a steady market with realistic pricing.”

There were 5,200 buy-to-let home purchase mortgages completed in the month, some 8.8% fewer than in the same month a year earlier. By value this was £0.7bn of lending in the month, 12.5% down year-on-year.

There were 14,100 buy-to-let remortgages completed in the month, some 20.5% more than in the same month a year earlier. By value this was £2.2bn of lending in the month, 15.8% more year-on-year.

Jackie Bennett, director of mortgages at UK Finance, said: “Homebuyers have shaken off the winter blues, with purchases by first-time buyers and home movers reaching their highest levels for February in over a decade.

“Remortgages are also up year-on-year, as homeowners look to fix costs amid anticipation of further interest rate rises.

“Meanwhile the buy-to-let market continues to operate at stable but subdued levels, due in part to the impact of recent legislative and tax changes.”

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