Gross mortgage lending experienced the first annual fall since 2010 last year.
According to UK Finance’s ‘Household Finance Review – Q4 2019’, mortgage lending to all buying demographics fell in 2019, despite the strong end to the year.
The overall market loans fell by 1.5 per cent between 2018 and 2019, falling from 776,200 to 764,900.
First-time buyer loans fell modestly from 353,000 loans in 2018 to 351,000 last year, a fall of 0.6 per cent.
Homemovers and buy-to-let investors suffered to a greater extent. Those moving up the ladder were more affected by the political uncertainty with loans falling 2 per cent annually. Overall loans to this group fell from 351,000 in 2018 to 344,000 last year.
Following the perceived harsh government tax and legal regulatory changes to investment property, buy-to-let loans fell by 3.2 per cent annually from 72,200 to 69,000 loans.
John Phillips, National Operations Director at Just Mortgages, said:
“The figures released today by UK Finance confirm what we already knew – that the market was at best flat over 2019 as a whole. While loans to first-time-buyers were down only modestly (a fall of 0.6%), this was in spite of various measures aimed at supporting that sector, and homemovers were clearly deterred by the ongoing political uncertainty around Brexit, with loans down 2% over the year.
“As more recent figures have shown, we began to see an upward turn towards the end of the year, and so far, this has continued into Q1 2020 with buyers and vendors coming back into the market in strength. There is every reason to believe that with political uncertainty resolved to a degree, there is a real recovery on its way.
“The fly in the ointment now is the coronavirus. People’s health is the number one priority, but we also need to minimise disruption to everyday life as this could have serious knock-on effects for people’s livelihoods in all walks of life. There’s a real risk it will stop the recovery in its tracks.”
Richard Pike, Phoebus Software sales and marketing director, said:
“The new report from UK Finance, in all its detail, is basically telling us that the first two months of 2020 have bucked the trend from 2019.
“Although there were ups and downs throughout the year the overall figure shows activity was at its lowest since 2010. There were many overriding factors last year but, thankfully, many of those have now been negated.
“The question now has to be, what will be thrown at us for the rest of this year? We’ve started the year well but there is one black cloud that is hard to ignore, and it is one that is already having an effect on the world’s economy. How the Coronavirus effect will translate down the line into the housing market is anyone’s guess, but it is unlikely to have no effect at all.”
Jonathan Sealey, Hope Capital’s CEO, commented:
“Over the past few months, it has felt as though we were experiencing a real sea change in the market as the political arena became less of a focus. We have definitely seen the busiest start to any year so far as people started looking forward to a more stable environment.
“Unfortunately, that may well be up in the air again as nervousness surrounding the COVID-19 outbreak takes hold. Nonetheless, the country has shown that despite everything we are a resilient lot. The market held it’s own in 2019 and that’s not something that many would have predicted at the beginning of the year.”
Eric Leenders, Managing Director at Personal Finance, commented:
“Last year saw a slight fall in levels of mortgage activity for home purchases, largely driven by increasing affordability pressures. Meanwhile the remortgage market remains competitive, although the shrinking number of customers coming to the end of their fixed rate deals will start to impact volumes in this segment.
“While borrowers are benefitting from relatively low rates on unsecured credit, levels of borrowing remain somewhat muted with some people instead opting to increase their mortgage borrowing as a more cost-effective way of managing their finances.
“The same low rates have also led to consumers keeping cash in instant access accounts, with demand for longer-term savings products constrained.”
