Property market boost as mortgage lending increases

2018 is looking brighter for UK house buyers as mortgage lending starts to rise. UK Finance, the trade association that represents lenders, revealed that lending rose for first-time buyers and movers in November, up from the previous month and on November 2016.

The first rise in the Bank of England base rate in almost a decade is acting as a prompt to buyers to secure their mortgage on low interest rates.

A total of £5.6 billion was loaned to 34,800 new first-time buyer mortgages in November. The number of first-time buyer mortgages was up 15.2 percent year-on-year while the actual amount of lending rose by 16.7 percent in 12 months. According to UK Finance, the average first-time buyer is 30 years old and earns £40,000.

Meanwhile, £7.5bn of mortgage finance was agreed for 36,200 home movers, a rise of 16.8 percent on the same month in 2016. And the popularity of remortgaging was shown in the 8.5 percent increase in new homeowner remortgages, a total of 38,4000 at a cost of £6.4bn.

However, there was a drop in the number of buy-to-let (BTL) mortgages – 6,000 new BTL purchases, down 1.5 percent on November 2016 with a value of £0.9bn. The number of BLT remortgages also fell to 13,500, 3.6 percent fewer than a year earlier. This amounted to £2.1bn of lending, down 4.5 percent year-on-year.

Activity is buoyant

The positive news on increased lending is a boost to a housing market described as “flat” by the Royal Institution of Chartered Surveyors (RICS) in 2017. Estate agents had also reported the lowest levels of stock on their books in 40 years halfway through the year.

Paul Smee, head of mortgages at UK Finance, said: “The data shows housing market activity remains buoyant, despite November’s rise in the base rate. Steady increases in lending for house purchases, together with increases in homeowner remortgages, reflect a keenness among consumers to benefit from still historically low interest rates and a highly competitive marketplace.”

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