UK Finance: mortgage lending makes steady increase

Ryan Bembridge

August 24, 2017

Mortgage lending grew by 2% annually to July 2017, up from 1.9% in June, with the help of strong first-time buyer activity, UK Finance figures show.

While there was £23bn of lending in July the association warned the pace of growth is likely to slow slightly in the months ahead due to a ‘challenging’ economic outlook.

Eric Leenders head of personal at UK Finance, said: “Consumer borrowing from high street banks remained stable in July, as continued pressure on household budgets reduced spending and saving.

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“Steady levels of mortgage activity seen through the first half of the year continued into July. First-time-buyer numbers continue to be strong, helped in part by government schemes.

“But that has been offset by home movers, where a shortage of homes on the market is limiting their activity.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, has noticed strong first-time buyer activity first hand.

He said: “At the coalface we have seen a continuing determination of first-time buyers in particular to take advantage of landlords being distracted by higher entry costs and stiffer regulation to buy at more competitive rates, underlining their confidence in the long-term future of the market.”

John Eastgate, sales and marketing director of OneSavings Bank, predicted buy-to-let activity to surge before the Prudential Regulation Authority’s regulatory changes come into force in September.

He said: “In the buy-to-let market, we predict a boost in lending later this year as landlords strive to complete deals ahead of the PRA’s upcoming changes to portfolio landlord lending rules.”

He added: “A record number of homeowners will be coming to the end of their initial term in September and October, so we would expect remortgaging to play a bigger role in the coming months.”

Richard Pike, Phoebus Software sales and marketing director, seemed heartened by the end of the Bank’s Term Funding Scheme in February.

He said: “Despite the fact that the housing market is flat, the Bank of England is now obviously confident that the economy is on the right track as it has just announced that it will pull the Term Funding Scheme at the end of February as planned.

“This scheme has been a significant inhibitor to the securitisation market by providing banks with such low cost funding.

“In 2018 we will therefore expect to see a lot more activity in the securitisation market as a result.”

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