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Mortgage Market October 2015

  • The Council of Mortgage Lenders (CML) estimates that gross mortgage lending reached £20 billion in August, the highest August figure since 2007. This is 8% lower than the July figure but 12% higher than August last year.
  • August data for gross mortgage lending from the British Bankers' Association (BBA) shows remortgage activity accounted for almost a third (31.5%) of all the loans, while those for home purchase represented 58.6%, the remainder being for other secured lending.

  • Buy-to-Let (BTL) lending for house purchase has showed stronger growth than home-owner loans for most of the year, and represented 18% of gross lending in July. Overall, BTL lending rose sharply in July, increasing both month-on-month and year-on-year by volume and value for the third consecutive month in a row. While BTL house purchases rose significantly, the increases are driven more by strong remortgage activity since the beginning of the year.

  • The Halifax reports that mortgage payments as a percentage of earnings in Q2 averaged 28.8% in the UK and 45.1% in London. Nationwide data indicated that for first-time buyers, the corresponding figures were 34.7% for the UK and a massive 65% for London.

  • The amount of mortgage products available has passed 15,000 for the first time since 2008, according to Mortgage Advice Bureau's National Mortgage Index. The number of direct-only products – deals where the mortgage is arranged directly with the bank or building society, fell by 2% in August compared to July – while products available when using a mortgage broker grew 16% for the same period.

  • Almost three quarters of mortgage professionals expect a number of lenders to launch higher loan-to-value deals when the Help to Buy mortgage guarantee scheme is terminated at the end of 2016. Santander and Nationwide have already announced they would begin to lend on 95% LTV mortgages without the assistance of the mortgage guarantee scheme.

  • Mortgage holders could be prevented from moving to a cheaper mortgage deal under new EU rules that will begin to be introduced this autumn. The new rules officially come into force in March 2016, but can be enacted earlier, meaning that more people trying to remortgage could be stranded on an expensive variable rate, which most home loans revert to after any fixed period has ended.

"Despite the burden of increased regulatory control, the mortgage market remains active and likely to remain so until interest rates rise. Lending levels would be even higher if there were more properties available to buy." Nick Barnes, Chestertons' Head of Research

Download Chestertons Residential Observer - October 2015