Mortgage market softens in September following strong period of growth

Written by Oliver Wade
13/11/2018

Throughout September, there were 29,400 new homemover mortgages completed, approximately 8.4% lower when compared to September 2017, revealed the latest Mortgage Trends Update from UK Finance.

The association reported that the £6.5bn of new lending in the month was 5.8% down year-on-year, with the average homemover being 39 and possessing a gross household income of £56,000.

The volume of new first-time buyer mortgages completed in the month also dropped when compared to the same month last year. There were 29,400 completed in September, 4.5% fewer than last year, while the £5bn of new lending remained the same year-on-year. The average first-time buyer in September was 30 and has a gross household income of £42,000.

The remortgage sector also experienced a slight dip in September, with 35,600 completed in September being 0.6% down on the same month last year. The £6.4bn of remortgaging in the month was 1.5% down year-on-year.

There were 5,200 new buy-to-let home purchase mortgages completed in the month, dropping significantly by 18.8% when compared to September last year. By value this was £700m worth of lending, representing a 22.2% drop year-on-year.

There were 12,300 new buy-to-let remortgages completed in the month, some 0.8% lower than in the same month a year earlier. However, the value of lending year-on-year remained the same at £2bn.

Commenting on the data, UK Finance director of mortgages Jackie Bennett said: “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 homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”

Trussle mortgage expert Dilpreet Bhagrath added: “The market is looking subdued at the moment as a lot of financial pressure is putting new buyers off and many people are reluctant to buy and sell properties until the Brexit deadline has passed.

“What is positive is that remortgaging numbers are only fractionally down from last year, despite fewer people moving home this year. Switching to a different Fixed Rate mortgage product can save households thousands of pounds a year. With two million people currently on a Standard Variable Rate (SVR) mortgage, we hope that with the increased use of technology making the switching process easier, we’ll see more remortgages and fewer people languishing on an SVR."

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