You are here: Home - Mortgages - Buy To Let - News -

Mortgage lending slowdown hailed as sign of healthier market

0
Written by: Samantha Partington
11/03/2015
A slight decline in gross mortgage lending, high loan-to-income advances and a decline in the value of first-time buyer loans has been hailed as an indication of a ‘healthier mortgage market'.

The Bank of England’s lending statistics revealed gross advances dropped by 0.2 per cent year-on-year in quarter four 2014 to £51.3bn.

However in comparison to Q3 a sharper drop off in lending was recorded as gross advances fell by 8.1 per cent from £55.9bn. Net advances decreased from £9bn in Q4 2013 to £8.1bn in Q4 2014. The statistics revealed a decrease in high loan-to-income lending as the proportion of gross advances to borrowers with a single income multiple of more than four times the mortgage fell by 1.1 percentage points to 9.7 per cent in Q4 2014.

The proportion of gross advances to borrowers with a joint income multiple of more than three times decreased by 2.4 percentage points from Q3 2014 to 26.2 per cent. House purchases accounted for 71 per cent of lending in Q4; at £36.4bn this was 0.8 percentage points lower than the previous quarter but 3.7 per cent higher than quarter four 2013.

The proportion of lending to first-time buyers increased by 0.1 percentage points to 21.8 per cent in Q4 last year but the value of residential loans for first-time buyers decreased over the quarter to £11.2bn.The proportion of buy to let lending increased from 14.3 per cent in Q3 2014 to 14.9 per cent in Q4 2014. In value terms over the past year lending rose from £6.6bn advanced in Q4 2013 to £7.6bn in Q4 2014.

The proportion of remortgages increased to 23.7 per cent in Q4 2014 from the lowest recorded point of 23% in Q3 2014 while other new lending, which includes lifetime and equity release mortgages, fell from 3 per cent in Q3 2014 to 2.9% in Q4 2014.

Adrian Gill, director of Your Move and Reeds Rains estate agents, said: “The lending landscape has been extensively re-shaped in the past year and fresh regulations and affordability checks have cultivated a much healthier mortgage market. Mortgage approvals may take longer to come to fruition but buyers are benefiting from a more thorough and considered borrowing process. In the longer term, providing customers with the most suitable mortgage product for their needs is of paramount importance.”

In the prolonged low-interest rate environment borrowers are increasingly willing to take on variable rates. The percentage of gross advances at fixed rates decreased for the first time in nine quarters from 82.6% in Q3 2014 to 82.2 per cent in Q4 2014.

High loan-to-value (LTV) lending took a slight tumble as the proportion of gross advances at LTVs of over 90 per cent decreased by 0.5 percentage points over the quarter to 3.8 per cent in Q4 2014. Head of lending at Mortgage Advice Bureau Brian Murphy said: “Mortgage affordability is certainly swinging in consumers’ favour. However, for those with small deposits, there is definite room for improvement.

“While the Help to Buy scheme has helped to prop up higher LTV lending, it continues to be underrepresented in the market. More lenders need to expand this area of lending to ensure the housing ladder is not out of reach for lower income first-time buyers.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Carney: It would be ‘foolish’ to cut rates to tackle low inflation

Mark Carney has told MPs it would be ‘extremely foolish’ for the Bank of England to cut interest rates further...

Close