First time buyers may be reaping the benefits of low interest rates and competitive lending productsNick Barnes
The Council of Mortgage Lenders estimates that gross mortgage lending reached £13.4 billion in February. This is 9% down on both January and on last February and is the lowest monthly estimate for gross mortgage lending since April 2013.
Recent research from Barclays highlights that mortgage market competition among lenders remains intense. For those able to transact with 60% loan to values, two year deals are available (at the time of writing) at a fixed rate of around 1.2% and 10 year deals are available at rates below 3%.
The Times reported that proposals from the Basel Committee on Banking Supervision could lead to banks having to increase the cost of mortgages for higher risk customers such as first-time buyers and others who need high loan-to-value products. The article suggested that the new rules could more than double the amount of capital that banks have to hold against lending.
Under the EU Mortgage Credit Directive (which will introduce EU-wide conduct standards for firms selling mortgages), anyone wishing to remortgage with a new lender will need to satisfy affordability tests – although these will not apply if they remortgage with their existing lender. The requirements of the Directive must be implemented by 21st March 2016 although the intention is to implement the requirements into legislation this year.
The latest monthly survey by the National Association of Estate Agents (NAEA) has shown that some first time buyers may be reaping the benefits of low interest rates and very competitive lending products as 30% of those who purchased a house in February were first time buyers. That is the highest number since September 2014 and may also reflect that new stamp duty rules have prompted some people into buying.
Data from the Financial Conduct Authority show that the proportion of regulated mortgage loans granted at loan-to-values of more than 90% and up to 95% has more than doubled from 2.0% in Q4 2013 to 4.2% in Q4 2014.