House purchases, rather than remortgaging, continues to be the main driver in the housing market, new data on July lending data shows.
The buy-to-let, first-time buyer and home mover sectors all grew strongly, which CML director general Paul Smee attributes to the UK’s improving economy.
“There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to all this change,” Smee says.
Jonathan Harris, director of mortgage broker Anderson Harris, says he’s surprised that remortgaging is still muted given how competitive rates are.
“This may be down to borrowers fearing that they won’t be able to remortgage as a result of the new mortgage rules or simply enjoying such good standard variable rates that they don’t see the point.
“Until an interest rate rise is imminent, many borrowers who are reluctant to remortgage are unlikely to feel the urge to do so.”
However he says some people may be convinced by great new rates coming onto the market, with Barclays, Nationwide, Skipton and Coventry all cutting their fixed rates this week.
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HOUSE LENDING HIGHLIGHTS:
Lending to first-time buyers is well up on last year. There were 30,200 first-time buyer loans in July – 3 per cent more than in June, and 25 per cent up on July 2013. By value, there was £4.6 billion of lending to first-time buyers in July – 10 per cent up on June and 39 per cent higher than July last year.
Lending to home movers also grew. In July, the number of loans advanced to movers was 37,500, 15 per cent up on the previous month and 19 per cent on July last year. By value, lending to movers totalled £7.2 billion, 20 per cent up on June and 31 per cent up on July last year.
Remortgage lending remains comparatively muted. The number of remortgages in July was 4 per cent up on June but 15 per cent down on July last year. The value of these loans (£3.9 billion) was up 3 per cent on the previous month and down 5 per cent on July last year.
Buy-to-let lending is climbing. Lending for buy-to-let grew 9 per cent over the month to £2.4 billion in July, and an increase of 26 per cent from £1.9bn in July last year.
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