The Bank of England reported that March saw the lowest number mortgage approvals since September 2016. With 122,918 mortgages approved, this showed a fall from both Jan and Feb 2017. With lenders still looking to keep rates low and also making “tweaks” to their lending policy to make it easier to borrow money, the opportunity for buyers to borrow has improved. It will be interesting to see the next quarters figures.
With figures just released we also learned that mortgage lending in March increased 26% against the previous month but showed a 19% drop year on year. Yes, February really was a dire month! Some good news though, there was a marked increase in the number of First Time Buyers.
UK house prices rose 4.1% in March 2017 compared to the previous year. With the average UK house price now £215,848, this is a smaller increase to February’s data, where year on year rises stood at 5.6%. With rising price inflation and stagnant wage growth, there is concern among mortgage lenders of future affordability issues with the current lending parameters which is something I have been saying for a long time, they may lend you the money but you still have to pay it back.
Barclays have announced improvements to its mortgage lending policy across both Buy to Let and residential mortgages. For residential mortgages, the bank will now take into account bonuses when assessing affordability. Previously, this was only considered if the minimum income was £75,000. Also, the bank has automatically allowed for a pension deduction, so there is no longer a requirement to disclose the actual amount, this should help borrowers who opt to pay higher pension contributions.
Barclays was also the 3rd lender this month (May) to revise mortgage rates. This is across the entire range and encouraging that it includes the 95% Loan to Value bracket. For those clients with a smaller deposit, a rate of 3.69% is competitive and is a good option with a lender that tends to be more accommodating on affordability.
HSBC is another lender that has made reductions to its mortgage rates if these are in the higher loan to value ranges. The highlight of the reductions is at 85% LTV, which is now 1.34% for clients with a 15% deposit.
Tesco Bank have announced a new range of lower mortgage rates. With a lot of the changes on products with no arrangement fees, this will make the Tesco rates competitive on an overall cost basis. A good example is the 85% LTV 2yr fixed at 1.88%. Although not the lowest by rate, with some other lenders charging £1500 or more for their fixed rate deals, this Tesco offer does come into play at the right loan amount. “Every little helps.”
The housing market is quiet. It is easy to put this down to election-related uncertainty but historically this has never proven to be the case, more likely to be the result of conscious or unconscious concerns about inflation, the subsequent impact on affordability as well as the UK’s future trading arrangements with Europe. Housing trends are influenced by confidence in the wider economy consequently it may be a while before we see any real increase in property price growth which isn’t necessarily a bad thing in my opinion. Sustainable growth is infinitely more desirable then “Boom and Bust”.