Banking and financial trade association UK Finance has released data showing that 24,880 mortgages were taken out for first homes in February 2019. This is 4.1 percent more than for the same month last year and is the fifth consecutive month of year-on-year increase.
The number of homemover mortgages remained roughly the same as last year at 23,660.
Remortgages with additional borrowing were up a substantial 10 percent on the previous February, at 18,200. On average borrowers took out an extra £52,000. Mortgages with no additional borrowing were also up at 18,360, a 7.8 percent increase.
The UK Finance report says that customers are still keen to explore remortgaging to ensure they have the best value loan possible.
Loan to value rates on house purchases was 72 percent, with a corresponding loan to income ratio of 3.37. Remortgages had a lower loan to value ratio of 57 percent, with a loan to income ratio of 2.74.
The buy-to-let market was considerably lower than in February 2018, with 4,800 new buy-to-let mortgages completed, a reduction of 7.7 percent.
Buy-to-let remortgages were up 2.1 percent at 14,400 for the month. This suggests that while landlords have been discouraged from buying because of increased financial and regulatory restrictions, those with existing properties are still shopping around to find the best deal.
Mortgage lending forum the Intermediary Mortgage Lenders Association (IMLA) believes that lenders are being pushed into higher loan to value borrowing by a competitive marketplace and buyers’ need for larger loans. Lenders are also becoming more open to self-employed borrowing and later life mortgages.
Kate Davies, IMLA Executive Director, said:
“Lenders are likely to be cautious, however, in terms of going up the risk curve: the loans that have been advanced at higher LTVs over the past five years show exceptionally low arrears by historical standards, and this is welcome.
“Consumers have been able to benefit from the market competition and the resulting reduction in mortgage spreads, particular on higher LTV products. But, as our recent New Normal report identified, with lenders having to hold more capital against mortgages as a result of the changes to the Basel regime, it may be that mortgage spreads cannot go much lower.
“‘The market is likely to continue to be challenging in terms of the volumes of business that can be written at sustainable margins. Lenders will no doubt develop new and innovative products to meet consumers’ needs, but must do so within the inevitable constraints of the regulatory and prudential framework.”
As a conveyancer, do you foresee continuing growth in the first-time buyer mortgage market?
