Interest rate rise boosted mortgage market activity in the UK in November 2017

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Mortgage market activity in the UK buoyant during November 2017 with steady increases in mortgage lending for first time buyers and home movers compared to the previous month and the equivalent period in 2016.

There were 34,800 new first time buyer mortgages in the month, some 15.25 more than in the same month a year earlier, according to the monthly report from UK Finance.

It also shows that there was £5.6 billion of new lending in November, up 16.7% year on year and the average first time buyer is aged 30 and has an income of £40,000.

There were 36,200 new home mover mortgages in the month, up 16.8% year on year with lending of £7.5 billion, a rise of 19%. The average home mover is aged 39 and has an income of £54,000.

There were 38,400 new home owner remortgages, up 8.5% with £6.5 billion of remortgaging in November, some 10.2% more than the same month in 2016.

While there were 6,600 new buy to let house purchase mortgages this was down 1.5% compared with November 2016 and the value at £900,000 was the same year on year. There were 13,500 new buy to let remortgages in the month, down 3.6% and the £2.1 billion of lending was down 4.5% year on year.

‘The data shows housing market activity remains buoyant, despite November’s rise in the base rate. Steady increases in lending for house purchases together with increases in home owner remortgages reflect a keenness among consumers to benefit from still historically low interest rates, and a highly competitive marketplace,’ said Paul Smee, head of mortgages at UK Finance.

‘In contrast, declines in buy to let lending reflect the changing regulatory and fiscal environment for landlord businesses, where some landlords might be inclined to reappraise the viability of their portfolios,’ he added.

There is a huge incentive for consumers to try to lower monthly repayments by remortgaging, according to Nick Chadbourne, chief executive of LMS but he pointed out that the wider mortgage market is being supported by first time buyers.

‘This is being driven by three things: the exemption of stamp duty creating a prime opportunity for first time buyers to act now, great rates for high LTV mortgages aimed at first time buyers and comparatively good product availability at that end of the market,’ he explained.

The interest rate rise was the catalyst for more activity, according to Jeremy Duncombe, director of the Legal & General Mortgage Club. ‘Despite the Bank of England’s decision to raise the base rate in November, the market continues to show its strength. Not only did this increase act as a wakeup call to those whose mortgages were coming to the end of their term, but it also led to an increase in the number of first time buyers looking to secure a competitive rate ahead of any further rate rises,’ he said.

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Written by: Houseladder