Recently published figures indicate that stability is returning to the mortgage market despite the ambiguity that surrounded the recent Brexit vote. Some financial experts are also keen to stress that the housing market continues to fare better than many expected.
Mortgage lenders are seeing a surge in the number of mortgage applicants, reaching levels seen before the UK voted to leave the European Union. Since the Bank of England lowered the base rate to 0.25% in August there has been an increase in the number of re-applicants and new applicants, signalling a progressive rise in consumer confidence.
House purchase approvals have also increased, signalling that the 20-month slump in growth is now on the rise with nearly 63,000 approvals authorised within the period. Gross lending for the whole of 2016 is also estimated to be upwards of £245bn, which indicates a 10-12% rise when compared to 2015.
With the base rate at an all time low, experts consider that the cut should provide a boost to the finances of mortgage applicants due to the availability of cheaper and more competitive mortgage options. The news also signals a positive move for those who are concerned about the rising cost of living, with first-time buyers and movers now spending, on average, under 18% of their monthly household income on interest and capital repayments’.
Whilst the government has been keen to help first-time buyers with incentives, there has been a steady decline in the second-stepper market. Brexit, and the economic uncertainty that followed, seemed to have subdued this area of the market. However, although some experts stress that the number of people choosing to re-mortgage has remained broadly unchanged since August and has done little to encourage people to switch, the forecast, provided by the Council of Mortgage Lenders, indicates that ‘the mix of lending has moved towards re-mortgage activity’, accounting for over 40% of all lending’. They also indicate that this trend is likely to ‘continue in the future’.
An overall increase in mortgage lending ultimately signals a return in confidence and has the potential to stimulate a number of knock-on effects. For example, a rise in consumer confidence could trigger an increase in vendors bringing properties to market, increasing availability.
Complementing this positive news within the mortgage market, the UK Government has continued its campaign to promote incentives to prompt further beneficial activity within the housing market, offering various buying schemes, pledging investment capital, and relaxing regulations. These are all expected to help provide stability to the market in the future.
The final quarter of the year is also recognised as a good time for consumer investment as banks and mortgage providers seek to meet their lending targets. Couple this with the recent findings and it’s fair to say that now would be a good time for some people to re-evaluate their current mortgage arrangements.
