By New data released by UK Finance in September 2018 showed that the UK’s mortgage market began to soften across every sector of the mortgage industry, from first-time buyers to buy-to-let investors.
The latest trends reported from UK Finance revealed that there were 4.5 per cent fewer new first-time buyer mortgages completed in September this year, totalling 29,400. The total value of new first-time buyer mortgage lending was reported at £5 billion, which has stayed the same year-on-year.
The average age of a first-time buyer in the UK was reported at 30, with an average gross household income of £42,000.
Equally, there were 29,400 new home mover mortgages that were completed in September this year, which is an 8.4 per cent drop when compared to the same month in 2017. The total amount of mortgage lending in this area of the market was recorded at £6.5 billion, which is 5.8 per cent lower year-on-year. The average applicant for this type of mortgage is aged 39 with a gross household income of £56,000.
In the buy-to-let side of the mortgage market, September 2018 saw 5,200 new buy-to-let mortgages completed which is 0.6 per cent fewer compared to September last year. The value of new buy-to-let mortgages came to £0.7 billion of lending for September, which is a 22.2 per cent downturn year-on-year.
Following this trend, there were 12,300 new buy-to-let remortgages that were completed in the same month, which is 0.8 per cent fewer compared to the previous year. The value of lending remained the same at £2.0 billion.
Jackie Bennett, Director of Mortgages at UK Finance, commented on the results:
“Overall remortgaging for both residential and buy-to-let properties have levelled out after a period of strong growth. This reflects the number of fixed rate loans reaching maturity. Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes.”
“Demand for house purchases for both first-time buyers and home movers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”
Market reactions to this new trend in the mortgage market suggest that the uncertainty surrounding Brexit has had an effect on the reduction of new mortgages in September. As the country prepared for the news on the Brexit deal, many homeowners and first-time buyers were choosing to sit-tight and wait as the housing market experienced a downturn in house prices.
Another potential cause for this shift in the mortgage market was said to be the Bank of England’s recent decision to increase the base rate to 0.75 per cent. This steady period of lower interest rates isn’t guaranteed to last; however, the interest rates are still fairly low which could prompt those who are coming to the end of their mortgage term to investigate mortgage products that are better suited to their individual circumstances.
At the time of writing this article, a much anticipated Brexit deal was announced by Teresa May’s government, which will be covered in tomorrow’s news.
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