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Sharp drop in mortgages for house purchase but property prices perk up

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Figures from trade body UK Finance have revealed that November saw stark falls in mortgage completions for purchase, both among first-time buyers and homemovers.

In its latest mortgage trends publication, UK Finance said there were 30,620 new first-time buyer mortgages completed in the month, a drop of 10.5 per cent on the same month in 2018.

There was a 10.6 per cent fall in deals to homemovers too, with just 30,750 deals completed. 

However, UK Finance argued this was more a reflection of the strong purchase activity that took place in November 2018.

The value of the new lending was also down year-on-year. Lending to first-time buyers totalled £5.27bn, while to homemovers it amounted to £7.01bn. These were drops of 6.37 per cent and 4.9 per cent respectively.

On remortgages, deals with additional borrowing jumped 5.7 per cent from November 2018 to reach 18,610. For these deals, the average additional amount borrowed came to £51,470.

However, remortgage deals with no additional borrowing totalled 18,470, down by 12.4 per cent from the same month the year before.

It was a similar story in the buy-to-let market, where purchase deals fell 4.5 per cent year-on-year to a total of 6,300. There was also a 5.1 per cent drop in remortgage deals, to a total of 15,000.

Despite this, the value of new lending for both purchases (£900m) and remortgages (£2.6bn) to landlords was unchanged.

House prices on the up

Separate house price figures from the Office for National Statistics for November were more positive however.

It found that the average price rose in the UK over the year to November by 2.2 per cent, compared to 1.3 per cent in the 12 months to October.

There was a stark regional variance however, with prices in England rising 1.7 per cent, while Wales saw 7.8 per cent growth in the period. Prices jumped 3.5 per cent in Scotland and four per cent in Northern Ireland.

Mike Scott, chief property analyst at Yopa, noted this was the highest year-on-year rate of house price growth since November 2018, and argued that even on the mortgage front the overall trend was good as the mortgages completed in November were higher than for any month between January and May.

He added: “We are already seeing a strong start to the 2020 market, and with the Brexit uncertainty lifted for the time being we expect this to continue throughout the usual spring bounce in housing market activity.”


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