The value of mortgage lending, and the number of mortgages advanced, is a clear indicator of the health of the mortgage market. Things had been slightly affected by the implementation of the Mortgage Market Review (MMR) earlier this year, but it looks as though the market is getting back on track.
Research from the Council of Mortgage Lenders (CML) has revealed that the value of gross mortgage lending totalled an impressive £17.9 billion in June, up 6% on May's lending figure and 20% higher than in the same month a year ago. These growth rates already suggest an improvement, and additional figures show that it's house purchase lending, rather than remortgaging, which is proving to be the key driver.
In total, there were 28,600 mortgages advanced to first-time buyers in June, up 7% month-on-month and 19% higher than in June 2013. Home movers were granted a total of 31,900 mortgages, posting a monthly growth rate of 4% and an annual increase of 11%. The value of these loans also increased – first-time buyers received mortgages worth £4.2 billion, while home mover mortgages totalled £5.9 billion.
Conversely, remortgage lending increased at a much lower level over the month. Lending was up by 1% in number and 6% by value, but on an annual basis, the number of remortgage loans (23,600) actually fell by 8%. This sector of the market clearly hasn't recovered quite as strongly as elsewhere, but its modest monthly growth suggests that it's still on the up.
Paul Smee, of the CML, commented: "For the second month running since new FCA rules took effect, lending characteristics remain similar to the market beforehand. We now feel confident that, as we would hope, the MMR effect is more a gentle dampener than a hard brake. As we recently suggested in our revised forecasts, lending levels should continue to increase modestly over the course of the year, driven mostly by house purchase but with remortgaging also recovering."
Overall, the figures indicate that tighter affordability checks following the MMR haven't had as negative an effect as was feared, with mortgage lending levels already beginning to recover. First-time buyers haven't been forced out of the market by stricter regulations and nor have home movers been unable to take the next step up the ladder – all in all, it's looking good for the market, and with competitive mortgage deals still to be found, it could be good for borrowers, too.
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