Property UK: Lending data points to the best February in a decade for UK home movers

Today’s data suggests that mortgage lending for first time buyers, home movers and those remortgaging in February this year increased on the previous year and reached the highest level for February since 2007.

There was a discernible growth in the numbers of first time buyers who secured a mortgage in February, with a 2.4 per cent increase on the same period in 2017, perhaps the result of the recent changes in Stamp Duty and Land Tax for those taking their initial steps on the property ladder.

The number of home movers remained consistent in February against the same period last year, however there was a significant uplift in the numbers of those remortgaging, which increased by over 11 per cent on an annualised basis.

However, the growth in owner-occupied borrowing was contrasted with a decrease in buy to let lending, which saw a decrease of over eight per cent on February 2017, a likely outcome of the changes in taxation on landlords which is currently discouraging many leveraged investors to enter the market.

Jackie Bennett, Director of Mortgages at UK Finance commented on the data: “Homebuyers have shaken off the winter blues, with house purchases by first-time buyers and home movers reaching their highest levels for February in over a decade.

“Remortgages are also up year-on-year, as homeowners look to fix costs amid anticipation of further interest rate rises. Meanwhile the buy to let market continues to operate at stable but subdued levels, due in part to the impact of recent legislative and tax changes.”

Brian Murphy, Head of Lending for Mortgage Advice Bureau added: “The fact that overall lending levels increased to the highest since 2007 points to a robust market, and ongoing consumer confidence.

“It’s interesting to note that the number of home movers were unchanged on February 2017, suggesting that those who were purchasing were ‘getting on with it’ and not letting various news headlines get in the way of their decision.”

Brian continued: “Of course, we would anticipate that buy to let lending and appetite for investor purchases would decrease in the lead up to Section 24 kicking in, but looking at the data it would seem that whilst there has been a decrease, numbers haven’t fallen off a cliff, pointing to the fact that ongoing demand in the Private Rental Sector means that returns are still available, providing that investors take appropriate financial planning measures.”

So, what does all of this mean for the current UK property market, which according to reports from Rightmove last week, suggests that homes are taking longer to sell in some regions, amid a backdrop of many areas continually seeing a lack of properties available to buy, causing asking prices to increase in some towns and cities to previously unseen levels?

Mike Scott, chief property analyst at online estate agency Yopa explained: “The number of first time buyers has increased compared with last year, and with the busiest February for new house purchases in a decade, there’s no sign that the current slowdown in the London market is spreading to the rest of the country.

“There have been recent concerns about a fall in the number of house purchases this year, but these figures don’t give us any evidence for that.”

Mike concluded: “There’s little risk of a sustained downturn in prices as long as lenders keep lending, but equally there’s no chance of another house price boom while prices are already so high compared to average earnings.”

Whilst this all points to a degree of stability, with the suggestion in some quarters of an imminent Bank of England base rate rise, lending conditions are changing.

Only last night, Sainsbury’s Bank withdrew a number of rates with hardly any notice to mortgage advisers and brokers, leading to a chorus of disappointment this morning as many consumers who had been quoted a competitive deal found that the rate they had been offered had been rescinded.

They aren’t the only lender currently repricing products ahead of a likely twenty-five basis point rise next month. Others withdrawing and replacing deals in the last couple of days – albeit providing more notice before they did so – include Barclays, Tesco Bank and the Coventry Building Society.

Of course, rate changes are absolutely a matter of course in the mortgage industry and are a normal part of the lending cycle, but the movements seen over the last week or so do tend to indicate that the lending community may be retrenching.

The message then to borrowers is clear; whilst the market remains steady for now, if you are considering moving or remortgaging in the near future, whether the Bank of England base rate has increased or not, lenders would appear to be hedging their bets and mortgage rates are on the rise.

Whilst products are still highly competitive at the moment, it’s anyone’s guess as to how long that will remain the case.

Therefore, if you’re offered a competitive rate, it’s best to lock it down whilst you still can.

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