FTB monthly lending figures at 12 year high

This morning’s figures released by UK Finance have revealed that first-time-buyers were out in force during the summer, with just over 35’000 new first-time buyer mortgages completed in August – the highest monthly total seen since August 2007.

According to the data, the number of first-time buyer completions is 0.7% higher than in August 2018 to reaching a 12-year high.

However, looking at the rest of the market it was a different story as homemover mortgage completions saw an annual fall of 5.5%, new buy-to-let purchase lending fell 3.3% and buy-to-let remortgaging dipped 0.7% over the past twelve months.

UK Finance also revealed that there were 18,640 new remortgages with additional borrowing in August, 2.9% fewer than in the same month in 2018. For these remortgages, the average additional amount borrowed in August was £55,000. There were 18,100 new pound-for-pound remortgages (with no additional borrowing) in August 2019, 2.3% fewer than in the same month a year earlier.

As ever, the property industry was quick to react. Here’s what they’re saying:

Tomer Aboody, director of property lender MT Finance, comments: “Encouragingly, first-time buyer mortgages are up on last year, which isn’t too surprising considering the low rates and high loan-to-values being offered by lenders, along with a greater number of lenders fighting for market share.

Lower stamp duty or even nil stamp duty on lower priced property has proved a huge boost to the first-time buyer market. This is coupled with a sense of urgency from some in trying to get on the housing ladder before Brexit – there may be uncertainty now but who knows what the future holds?

Fewer home mover mortgages isn’t surprising at all. These are usually at the higher end of the pricing bracket, where people are more cautious in spending until either we have a resolution in the Brexit saga or the Labour party is nowhere to be seen in the running for government, given its potential disastrous policies in housing.

A drop in buy-to-let mortgages has become the norm and is unlikely to change until the second home additional stamp duty charge is either removed or lowered.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, had this to say: “Far from a housing market on its knees, new-first time buyer mortgages for August were at their highest level since the same month in 2007 showing real resilience. It also demonstrates the lengths lenders are going to in attracting first-time buyers with competitive mortgages at high loan-to-values and innovation on family lending products where families can help offspring onto the housing ladder.

Homemover mortgages dipped slightly on the previous month, underlining how important the first-time buyer market is to lenders competing for a limited number of deals.

Remortgaging continues to be strong as homeowners take advantage of cheap rates and stay put rather than moving to avoid paying the astronomical cost of doing so.

Buy-to-let also remains surprisingly steady – there was a slight drop off in new purchase mortgages as novice landlords avoid the sector, leaving it to experienced landlords to expand portfolios as they look for opportunities.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although a little historic, these figures still reflect a fairly accurate direction of travel and confirm what we are seeing on the ground. The market is behaving better than expected, reinforced by improving affordability and low mortgage rates but it is still jittery, awaiting firm political direction.”

Nick Chadbourne, CEO of LMS, comments: “We should see remortgage activity continue to climb in Q4, with a significant peak expected across October and November due to early redemption charge expiry dates. Remortgaging will continue to outperform other areas of the market, with the majority of borrowers opting for the certainty of a fixed-term deal.

It remains to be seen whether the market’s increasing attention on 10-year fixes will result in significant product purchasing changes. The latest LMS data shows that 10-year fixed deals make up just 5% of all remortgage deals, but we could see this figure climb as low rates remain attractive to borrowers.”

Kevin Roberts, Director, Legal & General Mortgage Club, said: “Britain has a healthy and resilient mortgage market. Competition amongst lenders has driven down rates to record low levels and thousands of homeowners are taking advantage of these deals to step onto the housing ladder or remortgage.

In many instances, these borrowers are enlisting the support of a mortgage adviser. Whether it’s someone who is self-employed or an older homeowner who wants to unlock housing equity in retirement, these experts are helping people across the market to find a product which best fits their circumstances. Our research even shows that 95% of borrowers who used an adviser to find a mortgage would recommend their family or friends do the same.”

Louisa Sedgwick, director of mortgage sales at Vida Homeloans, commented: “Today’s data shows a reasonable degree of resilience among the first-time buyer market, and it’s encouraging to see there were 35,010 new first-time buyer mortgages completed in August 2019, 0.7 per cent more than the previous year.

We know that first time buyers across the country face can face different challenges depending on where they want to buy. Every mortgage tells a different story and it’s key that lenders listen and respond to the needs of borrowers. Whether this be by recognising the role the Bank of Mum and Dad play, supporting government schemes such as Help to Buy or offering flexible and creative solutions such as friends buying together, the specialist market is in pole position to support this evolving and resilient sector of the market.”

Steve Seal, managing director at Bluestone Mortgages, added: “August is traditionally a quiet month in the mortgage market – but this year has been nothing if not out of the ordinary. First-time buyers continue to reap the benefits of Help-to-Buy, while remortgagers enjoy the competitive rates still widely available.

Dig a little deeper, however, and there is still a sizeable proportion of borrowers who cannot access the lending they need. In spite of the well documented shift in consumer demographics and changing demands, many customers with a complex financial situation are still denied mortgages by mainstream lenders. With a host of alternative options available, advisers continue to play a crucial role in directing those borrowers to lenders who are able to provide them with a tailored lending solution best suited to their circumstances.”

Published Date: Oct-18-2019