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Boost in mortgage lending

Boost in mortgage lending

Category: Mortgages

Updated: 14/01/2016
First Published: 14/01/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The housing market seems to be in pretty good shape at the moment, and that can only be good news for consumers. The number of people taking advantage of record low mortgage rates appears to be almost continually on the rise, and while November's figures show a dip in mortgage lending on a monthly basis, all sectors of the market have seen considerable annual improvements.

Clear growth

The figures, from the Council of Mortgage Lenders (CML), show that homeowner house purchase lending totalled £10.7bn in November, which marks a dip of 9% from October but a welcome increase of 18% year-on-year. Furthermore, the monthly drop was largely expected and is a typical seasonal feature, said Paul Smee of the CML, but "there was still growth across all lending types in November compared to the year earlier, suggesting continued improvement".

This was a pattern noted across the market: home-mover lending totalled £6.5bn, marking a monthly drop of 10% but an annual rise of 20%, while first-time buyer lending totalled £4.2bn, down 9% month-on-month but up 14% from November 2014. Remortgage lending saw the most significant monthly uptick of 36% to stand at £4.9bn, despite recording a monthly drop of 14%.

The number of mortgages advanced followed a similar trend, with all sectors reporting monthly falls but comfortable annual rises, the biggest improvement again being in the remortgage sector (29,300 loans were advanced during November, down 9.1% from October but up 24.2% year-on-year). Overall, gross mortgage lending in the month totalled £20.5bn, down 6% from October but up 27% from November 2014, which also marks the highest lending level for a November since 2007.

Improved affordability

The sheer number of people getting in on the action highlights how competitive the mortgage market has become, with average rates consistently falling and providers battling it out to offer better incentives and lower fees to attract customers.

Despite the fact that house prices have risen rapidly in the last year, the drop in mortgage rates has led to dramatically improved affordability: CML figures show that first-time buyers currently devote an average of just 18.3% of their monthly household income to their mortgage payments, down from 19.3% in November 2014 and the joint-lowest ever recorded, while for home-movers the percentage stands at 18.2% (down from 18.4% a year ago).

This all means that now's a great time to consider your options, whether you want to take the first step on the ladder, move up a rung or two, or simply want to remortgage to a better deal. Whatever your situation, make sure to compare the top mortgages to see if you can get a low rate, and potentially lower your repayments in the process.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.