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Low interest rates prompt steady increase in mortgage approvals

First-time buyers and home movers are securing mortgage approvals in increasing numbers as they seek to take advantage of still-low interest rates. Figures from UK Finance, the trade association that represents the lending industry, showed steady increases in mortgage lending in its analysis of mortgage trends for November 2017.

A report in The Times said housing market activity could be on the up after a difficult 2017, which saw the first rise in the Bank of England base rate in a decade and a slowdown in properties for sale.

The report added: “The Royal Institution of Chartered Surveyors had reported previously a sharp dip in the number of people looking to move house and the number of agreed sales over the past year, while the Land Registry said there had been a 15 per cent fall in housing transactions in England in September compared with the same month a year ago.”

In July 2017, estate agents across the UK also reported the lowest level of stocks on their books in four decades.

However, the data from UK Finance is more positive. It compared figures with the previous month and also for November 2016. With £5.6 billion agreed lending for 34,800 new first-time buyer mortgages in the month, November 2017 showed an increase of 15.2 percent in mortgage numbers and 16.7 percent in mortgage funds year-on year.

According to the figures, the average first-time buyer is aged 30 and has an income of £40,000.

Buy-to-let slows down

Meanwhile, there were 36,200 new home mover mortgages in the month, up 16.8 percent on a year earlier at a funding level of £7.5bn also up 19 percent in the same period. The average home mover is 39 years old with an income of £54,000.

Remortgaging continued to prove popular as 38,4000 homeowners reworked their finances to the tune of £6.5bn.

There was a fall in the number of buy-to-let (BTL) mortgages agreed, with 6,600 new mortgages financed by £0.9bn of lending and 13,5000 new BTL mortgages, valued at £2.1bn.

Paul Smee, head of mortgages at UK Finance, said: “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 homeowner remortgages, reflect a keenness among consumers to benefit from still historically low interest rates and a highly competitive marketplace.

“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.”

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About the Author Frances Traynor

Fran is the content writer for Capital Conveyancing, producing articles on all aspects of the conveyancing process and around the UK property market in general. If there is a topic you'd like to see covered on these pages, please drop Fran a line on [email protected]

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