Council of Mortgages data reveals mortgage approvals fell in November in prolonged winter slump
The Council of Mortgage Lenders (CML) have reported a 12.4% reduction in the number mortgages issued to people buying a home in November 2014. In a detailed report, the CML referenced the 55,600 house purchase loans that were advanced to buyers, a figure which is 6.6% lower than November of last year.
Of the total number of loans, 25,900 were given to first-time buyers. This figure is down 11.3% from October of this year and 3.4% from November 2013. The average loan to value of a first-time buyer mortgage increased year-year, arriving at 83% in comparison to the 80% from November last year. Nonetheless, affordability was analogous, with newcomers to the housing market routinely borrowing 3.37 times their given salary.
These figures apply to the period before chancellor George Osborne amended stamp duty to make reduce the tax burden for those looking to a buy a home. Experts have implied that this will have boosted the market since November 2014.
Although the figure remained higher than in 2013, the data released by the CMLrevealed a reduction in the number of buy-let loans made in November. In a continuation of a worrying trend, 17,700 buy-let loans, worth a total of £2.4 billion, were advanced. This indicates a fall in number of 10% and a reduction of 11% in value on October's statistics. Furthermore, re-mortgage activity fell 8% from October and 16.1% year-year.
The director general of the CML, Paul Smee, moved to alleviate any fear the news might cause. In a lengthy statement he said, ìThe easing back of activity is not completely unexpected as there is usually a seasonal lending dip in the winter months, and the major industry changes and more restrained market sentiment have inevitably caused month-month fluctuations over the last 12 months.î
Furthermore, he expected a 'steady acceleration' of the housing market in 2015. In an upbeat address he stated, "Our forecasts are for gross lending to continue to grow over the next two years, and this reflects our belief that there are more stable conditions in the market than a year ago." This signals a move by the CML to deliver the message that the lending market was, on the whole, improving.
Mark Harris, the chief executive of SPF Private Clients, a mortgage broker company, echoed these sentiments, stating that despite the fall in the first-time buyer loans, the demand for buy-let mortgages had been invigorated. As a result, lenders were eager to indulge this trend due to the fact that the challenges for new borrowers were less tough that those buying a home.
He stated that this was ì...no real surprise with savings accounts paying pitiful rates of interest, demand from tenants for rental property strong and lenders relaxing criteria and cutting buy-let rates. With buy-let falling outside the remit of the mortgage market review, it is clear to see why lenders might be keen to attract more business in this area, seeing it as a way of boosting lending volumes.î
Mr. Harris did acknowledge that ì...the resurgence of buy-let does have an impact on first-time buyers, with many competing for the same entry level properties.î However, this was not a reason to panic because of the ì...increase in the number of high loan-value deals available at competitive rates, the number of first-time buyers is unlikely to fall dramatically.î
These optimistic accounts are corroborated by an overall high housing demand and falling inflation. These factors heavily indicate that the current base rate will be retained at its record low until 2016.
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