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August mortgage lending hits six-year high August mortgage lending hits six-year high
(about 4 hours later)
Banks and building societies lent more money for people to buy houses or remortgage last month than in any August since 2008, new data shows. Banks and building societies lent more money to homebuyers last month than in any August for the past six years, new data shows.
The Council of Mortgage Lenders said that its members lent £18.6bn in August, 5% lower than July but 13% higher than August 2013. The last time this much money was lent to prospective buyers and homewoners was in August 2008 when lending was at £19.3bn. The Council of Mortgage Lenders said that its members lent £18.6bn in August, 5% lower than July but 13% higher than August last year.
However, CML chief economist Bob Pannell warned that analysts should not read too much into the annual rise as the August figure was flattered by traditionally stronger lending over the summer. Although the figure includes remortgaging, the CML said the bulk of the lending was for house purchases. The last time August lending was so high was in 2008 when it hit £19.3bn.
“A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market,” he said. However, CML chief economist Bob Pannell warned that analysts should not read too much into the steep annual rise. “A gentle slowing of lending activity may now be in prospect, as a result of the continuing impact of tighter lending rules and a softening of the London market,” he said.
Howard Archer, chief economist at IHS Global Insight agreed. “While the CML data indicates that the housing market is currently seeing decent growth, the bulk of the evidence indicates that activity has lost some momentum compared with the early months of this year, including the Rics survey for August,” he said. Howard Archer, chief economist at IHS Global Insight, said: “While the CML data indicates that the housing market is currently seeing decent growth, the bulk of the evidence indicates that activity has lost some momentum compared with the early months of this year, including the Rics survey for August,” he said.
“More stretched house prices to earnings ratios, the prospect that interest rates will start to rise before long (albeit gradually) and tighter checking of prospective mortgage borrowers by lenders will likely have some limiting impact on buyer interest.” The Royal Institute of Chartered Surveyors had said new buyer inquiries had fallen for two months in a row and the number of sales agreed last month was down for the first time since September 2012.
Archer added: “More stretched house prices to earnings ratios, the prospect that interest rates will start to rise before long (albeit gradually) and tighter checking of prospective mortgage borrowers by lenders will likely have some limiting impact on buyer interest.”
While the mortgage lending figures point to a similar upturn in lending to home movers, first-time buyers and buy-to-let landlords, it showed a continued fall in the amount lent to those remortgaging.While the mortgage lending figures point to a similar upturn in lending to home movers, first-time buyers and buy-to-let landlords, it showed a continued fall in the amount lent to those remortgaging.
“Remortgage activity looks set to remain fairly subdued, until such time as the fear of imminent rate increases shifts the financial incentives to switch,” Pannell said.“Remortgage activity looks set to remain fairly subdued, until such time as the fear of imminent rate increases shifts the financial incentives to switch,” Pannell said.
Despite an expectation of an imminent rise in the Bank of England rate rise banks and building societies are doing their best to attract new borrowers, with a slew of rate cuts over the last few days. Despite expectations that the Bank of England is edging closer to the first rate rise since 2009, banks and building societies are doing their best to attract new borrowers, with a slew of rate cuts over the last few days.
Metro Bank, Halifax, Barclays, Nationwide building society, HSBC, Virgin Money, Skipton building society, and Norwich and Peterborough building society are among those to change their rates. Meanwhile, Virgin Money has launched a new range that allows people to fix in for one year longer than the usual five-year deals and protect themselves against the prospect of interest rates rising for a prolonged period. Metro Bank, Halifax, Barclays, Nationwide building society, HSBC, Virgin Money, Skipton building society, and Norwich and Peterborough building society are among those to have changed their rates. Virgin Money has launched a new range that allows people to fix for one year longer than the usual five-year deals and protect themselves against the prospect of interest rates rising for a prolonged period.
“As we move into autumn, lenders have one eye on their year-end figures and are ramping up their lending volumes to meet them,” said Mark Harris, chief executive of mortgage broker SPF Private Clients. “Consequently, there are some excellent fixed-rates available over two and five years.”“As we move into autumn, lenders have one eye on their year-end figures and are ramping up their lending volumes to meet them,” said Mark Harris, chief executive of mortgage broker SPF Private Clients. “Consequently, there are some excellent fixed-rates available over two and five years.”
Would-be homebuyers are having to stretch themselves further to afford the properties they want. Figures from the Office for National Statistics earlier this week revealed that house prices hit a fresh record high in July after surging by 11.7% over the last year.Would-be homebuyers are having to stretch themselves further to afford the properties they want. Figures from the Office for National Statistics earlier this week revealed that house prices hit a fresh record high in July after surging by 11.7% over the last year.
The average price of a British home stood at £272,000 following three consecutive months of double-digit price rises. Most of the UK’s regions saw house values jump above their pre-financial crisis peaks, with the average property price in the capital breaking through the half a million pounds barrier to £514,000. The average price of a British home stood at £272,000 following three consecutive months of double-digit price rises. Most of the UK’s regions saw house values jump above their pre-financial crisis peaks, with the average property price in the capital breaking through the half a million pounds barrier for the first time to £514,000.