Category: Blog

Gross mortgage lending for the third quarter of 2013 was 32% than the same time period in 2012, according to the Council Mortgage Lenders’ latest figures.
The total for gross lending in the third quarter reached £49.6bn representing a 17.6% quarterly rise from the second quarter and the highest lending amount by quarter since the third quarter of 2008. The CML figures show £16.2bn was advanced in September, down from £16.4bn in August. On an annual basis, lending in September was 41% higher than last year when £11.5bn was advanced.
CML chief economist Bob Parnell says: “Indicators suggest we are witnessing the strongest house purchase performance in five years. House prices too have revived but modestly, aside from aresurgent London market. With the Help to Buy mortgage guarantee scheme becoming fully operational in January and firms implementing the mortgage market review in April 2014, it may be several months into 2014 before we get a true gauge of the scale and reach of Help to Buy. For now, the scheme has launched against an already recovering UK housing market with several quarters of improving credit availability, growing competition, and strengthening demand.”
Avelo head of intermediary Sophie Hall says: “The mortgage market is in fine fettle at the moment. Help to Buy is providing a platform for first time buyers to secure high LTV mortgages, and we have yet to see the impact of Help to Buy 2. With house prices rising, demand is still strengthening, and prospective buyers are increasingly confident in the direction of property values. Would-be buyers in many parts of the country are no longer facing the prospect of their new home losing value following their purchase, bolstering confidence.”

There were 69,140 house sales in July, up 17% from 59,141 in July 2012, according to figures published today by the Land Registry.
The number of properties sold in England and Wales for over £1m in July 2013 was 1,143, up from 852 a year before. Average house prices in England and Wales grew by 3.4% in the year to September, with the average price rising from £161,569 in September 2012 to £167,063 this year.
However, Wales by itself has experienced a 1.7% depreciation from £116,571 to £114,589.
The largest monthly gain was in the north east region, where prices rose by 2.7% to an average of £101,262, up from £98,600. London once again topped the regional growth table with a 9.3 per cent annual rise to September and 1.9% since August to leave the average house price at £393,462, from £386,125.
Legal & General Mortgage Club director Jeremy Duncombe says: “The significant house price rises recorded today by Hometrack and the Land Registry will continue to fuel speculation that prices are rising too quickly. However, it’s worth remembering where the market has come from. A year ago it was beset by lethargy so the impetus created by the various stimulus schemes should not be wished away too quickly. It is also worth remembering that Help to Buy is a temporary measure. If the Government needs to change its terms or withdraw it altogether to avoid the market overheating it can do so. The main long term problem is the chronic lack of suitable housing. This constrained supply is the main issue to solve if we are to ensure a stable, balanced and sustainable UK housing market in the future.”

House prices in London have jumped by 10 per cent in the last month alone, according to data from Rightmove.
The data shows prices in the capital have risen by £50,484, on average, to £544,232 since mid-September. Within prime inner London, the average price of a home now stands at £937,110, while the average price of London’s outer boroughs is now £461,937.
Rightmove director and housing market analyst Miles Shipside attributes the rapid rise to a return of sellers to the market after a slow summer led to pent-up demand.
Shipside says: “Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3% over August and September. However, this month’s rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2% a month.
”Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare. Unsurprisingly, many of this month’s best performers are boroughs in inner London.”
The national average house price reached £252,418 in October, after a rise 2.8 per cent in the last month and 3.8 per cent annually. However, these figures include London.
London’s recent rapid house price growth has led some to suggest Help to Buy should ignore London, or that the £600,000 limit should be lowered to around £300,000, therefore ruling out a lot of London properties and helping to avoid a house price bubble emerging.
However, London & Country mortgage specialist David Hollingworth says: “If you are a first-time buyer in London, you could argue that you are one of the most in need of the Help to Buy scheme.
“Existing homeowners will have seen their equity grow as a result of these price rises so they will have more options, including moving out of London and capitalising on the growth they’ve seen. But these numbers are scary and will lead to people questioning whether the market is losing control of itself.”

The volume of mortgages taken out by first-time buyers in August was up by 33% from twelve months previously, according to data released today by the Council of Mortgage Lenders.
A total of 27,100 loans were advanced to first-time buyers in August 2013, up from just over 20,000 last year. This also represents a seven per cent rise from July 2013. The value of first time buyer lending in August reached £3.8bn, up by 46% from last year and the average LTV advanced rose from 80% last year to 81% in August 2013.
SPF Private Client’s chief executive Mark Harris says: “There was a significant jump in first-time buyers in particular in August, with 33% more loans advanced and a 46% increase in the value of those loans compared with the same period last year.
“The mortgage guarantee phase of Help to Buy will boost the numbers of first-time buyers although the rates announced so far are disappointing. With a government guarantee behind them, you would expect lenders to be able to offer cheaper products. However, as more lenders join the scheme rates should fall further.”
Lending for home-owner purchase continued to show growth in August with 61,300 purchase mortgages completed, a seven per cent increase from July and 15% from August 2012. The total value of house purchase loans in August reached £9.7bn, representing a 20% rise from twelve months prior.
Total buy-to-let lending fell slightly from £2bn in July to £1.9bn in August with a total of 14,900 loans advanced to landlords in August. This was down from 15,200 in the previous month.
A 4.1% dip in remortgage lending to landlords was noted in the CML data with 6,900 buy-to-let loans advanced in August compared with 7,200 in July. The value of remortgage buy-to-let lending fell to £1bn in August from £1.1bn the month before.

House prices rose 6.2% year-on-year in the third quarter, according to the latest Halifax house price index.
Prices also rose 2.1% compared to the second quarter of 2013, leaving the average house price in the three months to September at £170,733. This figure is still 14% short of the August 2007 peak, despite eight consecutive months of house price inflation.
Halifax housing economist Martin Ellis says: “Housing demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence.
“There are signs that supply is beginning to respond to the pick-up in demand, which if continued should help to constraint the upward pressure on prices.”

Mortgage approvals in August were up 32% year-on-year at £9.3bn according to the latest figures from the British Bankers’ Association.
The seasonally adjusted figures show approvals rose 2% from July’s £9.1bn and were up 32% on August 2012’s £7bn. The monthly tally also marks a four-year high for approvals – the last time there were more approvals was in January 2009 at £9.4bn. The average value of loans for house purchase dipped slightly from £158,000 in July to £156,000.
Year-on-year the number of loans for house purchase has risen by 20% from 30,000 in August 2012 to 38,000 in August 2013. Remortgage volumes have also risen over the same period from 17,000 last year to 22,665 in August 2013. BBA statistics director David Dooks says the figures suggest that consumer confidence is growing.
He says: “For the first time in four years, annual growth in household borrowing on credit cards and personal loans has turned positive and mortgages approved for house purchase are also at their highest level since 2009.
“Business borrowing, influenced by large corporates using alternative market funding, again contracted, but within that, SME borrowing is stable.”
LSL Property Services commercial director David Brown says: “Mortgage approvals are still a long way from their peak, and more importantly a long way from the levels that could make everyone a homeowner.  This is excellent progress, but the mortgage industry has only conquered the foothills of a real recovery.
“Solvent banks, solid balance sheets, and economic growth are one thing.  Beyond these foundations of the industry, sustainable growth for mortgage lending will depend on people earning more, and eventually saving more. So while the next few years could prove better times for some first time buyers, the number who live in privately rented accommodation is set to keep growing.”

As the market has improved one particular trend has come to light, that is that more and more homeowners are choosing to enter the landlord arena by using Let to Buy.

Let to Buy is often thought of as a product for those homeowners who cannot sell their home (as a result of the economic climate over the last few years) and so instead choose to keep it and rent it out. In short, it is thought of as a product used as a necessity, rather than through choice, for the so-called ‘reluctant or accidental landlords’.
However, as the buy-to-let market has improved a large number of homeowners are seeing the benefits of retaining a property and renting it out to tenants. With the sector picking up at great speed now is the time for would-be landlords to make the move into buy-to-let and start building a property portfolio.
If a property no longer suits the needs of the homeowner and they have accumulated enough savings to put a deposit down on a more suitable home, Let to Buy allows them to turn their current home into a rental property which should, in time, provide a valuable income and capital growth opportunities.
It’s an interesting product and one which most lenders allow – with the exception of Godiva.
One thing we, as brokers, must be careful of is that we’re not facilitating a back door residential. A small number of homeowners may look to switch to a Let to Buy product but continue living in the property, under the pretence of renting it out.
A number of lenders have tightened up on this sort of activity by requiring proof of onward purchase and, rightly so, as this is a sure fire way of ensuring the buyer is using Let to Buy correctly. Of course, this does not work in all instances – there are some genuine cases whereby the homeowner can’t sell the property and decides to revert to a Let to Buy product and move back home with their parents, for example.
As long as lenders and brokers are vigilant and thorough when assessing a customer, the risk of back-door residential should be avoided and Let to Buy will continue to increase in popularity.

Lenders advanced £2bn to landlords in July, an 11% increase on the £1.8bn advanced in June, according to new monthly buy-to-let data published by the Council of Mortgage Lenders. The £2bn advanced in July is made up of £900m for house purchase – with the number of loans totaling 7,600 loans – and £1.1bn in remortgage lending, totaling 7,200 loans.
The number of loans for house purchase in July was 6.7% up on the 7,120 loans advanced in July, while gross lending for house purchase was up 12.5% on the £800m advanced the month before. The number of loans for remortgage purposes was up 13.4% up on the 6,350 loans advanced in July, while gross lending was up 23.6% on the £890m advanced in June.
This is the first time the CML has published buy-to-let lending on a monthly basis, as it previously only published buy-to-let data on a quarterly basis.
Online letting agent Rentify chief executive George Spencer says: “Landlord optimism is at its highest level in several years, thanks to strong rental yields, low mortgage rates and the general recovery in the housing market. Both experienced and novice investors alike are taking the plunge and expanding portfolios or getting into buy-to-let for the first time, while there is strong growth in buy-to-let remortgaging as existing landlords take advantage of ultra-low rates.”
Last month the CML published an estimate of residential gross lending, in which it said lenders had advanced £16.7bn to borrowers, its highest level since October 2008 and a 29% increase on the previous July. The trade body then provides a detailed breakdown of gross lending within weeks of publishing its estimate.
Today’s breakdown shows lenders advanced £3.5bn to first-time buyers in July, up 45.8% on the £2.4bn advanced in July 2012. The number of loans advanced to first-time buyers in July totaled 25,300, up 40.6 per cent on the 18,000 advanced a year ago. The typical first-time buyer’s loan size was £117,038 in July, up from £110,000 a year ago, while the average income of first-time buyers increased from £34,936 in July 2012 to £36,142 in July this year.
Affordability for first-time buyers improved from June to July, with the average income multiple falling from 3.33 to 3.31. However, on an annual basis loans were less affordable for borrowers, with the average income multiple being 3.24 times the typical borrower’s income in July last year.

House prices are up 5.4% year-on-year in August, according to the latest Halifax house price index. The average price in the UK in August reached £170,231 compared to £160,292 in August 2012.
Quarterly figures show that the three months to August were 2.1% up on the previous three month period. On a monthly basis there was a 0.4% rise from £169,567 in July – the seventh consecutive monthly increase.
Halifax housing economist Martin Ellis says: “Economic improvement and low interest rates, supported by official schemes such as Funding for Lending and Help to Buy, appear to have boosted housing demand in recent months.
”Nonetheless, relatively modest economic growth and below inflation rises in earnings are likely to act as a brake on the market. Overall, house prices are expected to rise gradually over the remainder of the year.”
Legal & General Mortgage Club managing director Ben Thompson says: “Today’s figures clearly confirm that the market is continuing to gather pace and that the recovery is well and truly on track. At the moment that pace is sustainable especially when you consider the downturn we have had since 2007.
”However the picture remains regional and patchy across the UK showing there is still work to be done in some areas.”

Research from LSL Property Services and research consultancy Acadametrics shows that house prices hit record levels in July, beating the previous best in 2008.
The England & Wales House Price Index rose 0.3% in July from the previous month with the index reaching 237.2 from 236.4 in June. The average house price across England & Wales hit £232,969; an increase of £5,796 in the last 12 months.
The report provides further confirmation of a strengthening housing market just a week after Nationwide’s own House Price Index showed a 3.9% annual rise in prices. LSL and Acadametrics’ research also highlights that 45% of all house purchases in the last year were first-time buyer purchases.
LSL commercial director David Brown attributes significant credit to government schemes such as Funding for Lending and Help to Buy, as he says: “Both schemes have helped banks boost first-time buyer lending by providing them with credit to offer more loans to new buyers and reduce rates on house purchase mortgages. Funding is more accessible for lenders, while banks are more confident than they were six months ago – which bodes well for the future.”
Brown points out that the continued uptrend in house prices is still be powered by strong performance in London where a 7.1% increase in prices is faster than anywhere else in the country.