Mortgage lending is rising and is in the middle of an, ‘upward trajectory,’ according to the latest report from the Council of Mortgage Lenders.
After a slow start to 2015, lending to first-time buyers and home movers increased during the third quarter of the year, in comparison to the second. In addition, there was also an annual rise from the same period twelve months ago.
A lot of borrowers are seeing the benefits of low costs, due to the continuing record low in the Bank Rate. Mark Harris, chief executive of mortgage broker SPF Private Clients, said that,’ with summer out of the way, lenders have an eye on year-end targets and with the Bank of England hinting that interest rates might not rise next year, there are some very competitive deals to tempt borrowers.’
The Council of Mortgage Lenders stated that gross mortgage lending amounted to £61.4bn during the third quarter of 2015. This was a rise of 18% on the previous quarter and a 12% rise on the same period in 2014.
In addition, the value of homeowner loans for property purchases made up 57% of gross lending. Remortgage activity made up 24%, with buy-to-let accounting for 18%.
‘After a slight lull in August, monthly mortgage lending picked back up in September,’ said Brian Murphy, Head of Lending at the Mortgage Advice Bureau. ‘Lending is now at similar levels to those seen in June and July, which represented a post-recession high. Remortgage lending had a significant role to play in this growth, with both the volume and value of remortgage loans up substantially month-on-month. In contrast, the value of loans for house purchases saw a slight decline while the volume remained static,’ he continued.
Mortgage Lending rises in Q3 of 2015
Paul Smee, Director General of the Council of Mortgage Lenders, also noted that, ‘the market was a slow starter this year, but this quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the new year.’
‘Buy-to-let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first-time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy-to-let landlords in September, and the growth in buy-to-let lending largely continues to reflect its more belated recovery from recession,’ he concluded.
Andrew Turner, director at Commercial Trust, echoed the positive sentiment surrounding buy-to-let lending. Turner said, ‘It is positive to learn that during September, gross lending of buy-to-let, buy-to-let house purchasing and buy-to-let mortgaging have all seen strong increases from the same time the previous year, indicating favourable lending conditions across all tenures.’
‘It is clear that buy-to-let is continuing to show real improvement, growing far more quickly than any other type of lending and continuing its trend of being the strongest UK mortgage market in the years since the recession. Though the bulk of both gross activity and yearly growth was remortgage loans, property purchase loans have also seen a more than modest climb – despite the continuously changing legislative environment in which landlords operate and the threat of increased buy to let regulation, both from pan-European legislation and the Bank of England itself.’
Turner concluded by warning against a return to previous lending conditions. He noted that, ‘if the past few years have shown us anything, it is that buy-to-let has been the biggest driver of the housing market recovery and instrumental in servicing the housing needs of the UK. Whilst it is crucial that we do not return to the risky lending conditions seen prior to the recession, it is equally crucial that we do not stifle landlords’ ability to continue to invest and provide homes we desperately need.’