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Mortgage Affordability hits 2021 high in September

The average maximum loan size available is up by nearly 10% compared to the start of the year in September – representing a 2021 high, according to the latest analysis from Mortgage Broker Tools (MBT).

Analysis of real cases processed through the MBT research platform found that the maximum loan size available to an average customer was £254,821 in September, compared to £234,224 in January.

This increase was primarily driven by improved options for first-time buyers with the maximum loan size available such a buyer standing at £276,060 in September, up from £230,555 in January.

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Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “It’s a very competitive lender landscape at the moment and that means more options for borrowers. Cutting rates is one way for lenders to get an edge, but it’s not the only way and we’ve seen improved choice at higher LTVs and lenders making changes to their affordability calculators to become more competitive.

“At Mortgage Broker Tools, we’ve also seen the introduction of new ways for first-time buyers to enhance their affordability options, with results that show the benefits of combining an equity loan with a first charge mortgage, and this has certainly helped to boost the average loan size available to this group of customers.

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“The latest MBT Affordability Index shows that even though the maximum loan size available is at its highest point this year, a quarter of cases are still deemed to be unaffordable by lenders, so it’s really important that brokers carry out thorough research amongst as many providers as possible.

“Our residential panel, for example, features 44 lenders, which is nearly a third more than its nearest competitor. This difference in panel size makes a tangible difference to how much a client is able to borrow – in fact, we have calculated that by researching the additional lenders we offer, an average client would be able to borrow an extra £38,000. And this could be the difference in helping a client to achieve their objectives or letting them down.”

Source: Mortgage Introducer

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Mortgage arrears remain low as payment holidays come to an end

Mortgage arrears remain close to historically low levels due to the mitigating effects of payment deferrals and other tailored forbearance, according to the latest figures from UK Finance.

Q2 saw 26,560 homeowner mortgages in early arrears (those between 2.5% and 5% of balance in arrears), down 5% on Q1.

Some 27,910 homeowner mortgages had more significant arrears (10% or more of the outstanding balance), an increase of 630 on the previous quarter.

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210 homeowner mortgaged properties and 230 buy-to-let mortgaged properties were taken into possession in the second quarter of 2021.

Steve Seal said: “While it’s encouraging to see mortgage arrears remain close to historic lows, the picture could look very different in the coming months. Mortgage payment holidays have now come to an end, and with furlough and the Self-Employment Income Support Scheme set to end in September, there’s likely to be more homeowners who will struggle to keep up with mortgage repayments.

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“This may only be short-term for some borrowers, however it is something that could impact their credit profile in the long-run. As a result, many of these customers risk being turned away from highstreet lenders and may not know where else to turn. This is where the specialist lending market has an increasingly important role to play.

“As an industry, it is our responsibility to support this cohort of customers which is only set to grow post-pandemic, signposting them to the options available and highlighting how the specialist market can cater to their unique needs.”

Source: Mortgage Introducer

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Mortgage rates fall as choice rises, according to the latest Moneyfacts report

Continued growth in product choice for borrowers, in addition to rate competition, has led to reductions in overall average fixed rates month-on-month, according to the latest Moneyfacts UK Mortgage Trends Treasury Report data.

Nine months of consecutive increases in mortgage availability has seen total product choice reach its highest level in 16 months, with 4,512 deals on offer.

This is an increase of 269 in the last month alone, and the highest this has been since March 2020, when the figure was 5,222.

This is the first time since June of 2018 that Moneyfacts has recorded availability increasing across all the individual loan-to-value (LTV) tiers.

Borrowers seeking higher LTV products have seen the largest improvements in choice, particularly at 95%, where the research recorded a jump of 61 products compared to June 2021, while the current total of 253 available deals offers 239 products more than there were this time last year.

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For only the second time in the past 12 months, both the average overall 2-year and 5-year fixed rates fell over the course of the month, to 2.55% and 2.78% respectively.

Reducing by 0.04% in both cases, these are the largest monthly reductions recorded for either rate since June 2020.

July 2020 logged record lows of 1.99% and 2.25% for these rates, due to the dearth of available deals fuelling these averages, particularly at the higher-rated, higher-risk top LTV brackets.

Eleanor Williams, finance expert at Moneyfacts, said: “The level of choice available to those looking for a residential mortgage has risen substantially again between June and July, as volumes rose by 269 new products bringing the total available to over 4,500.

“Over the past six months alone availability has recovered by 1,619 – or 56% – and for the first time in over three years, we tracked improvements in choice across all the LTV brackets this month, great news for borrowers with all levels of equity or deposit.

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“Our data shows there is further cause for positivity as both the overall average 2 and 5-year fixed rates have fallen.

“At 2.55% the average 2-year fixed rate is at its lowest since February (2.53%), while the average 5-year rate at 2.78% is the lowest since April (2.77%).

“Although the 2-year overall rate is 0.06% above its equivalent rate from a pre-pandemic July 2019, the 5-year overall average rate is 0.07% below its equivalent two years on (2.85%) and could indicate lenders are moving to price longer-term fixed rates more competitively, perhaps reflecting a shift in borrower focus to locking in for stability in these uncertain times.

“First-time buyers and those considering a mortgage at higher LTVs are amongst those to benefit the most from rate cuts, with the average 2 and 5-year fixed rates at 90% LTV falling by 0.15% and 0.08% respectively, while at 95% LTV reducing by 0.09% and 0.06%, respectively, but equally it is impossible to ignore the growing ranks of providers offering sub-1% deals to tempt borrowers with larger levels of equity or deposit as well.

“According to the latest Halifax House Price Index, there was a 0.5% drop in property prices, likely linked to the stamp duty holiday tapering off, but this in no way detracts from the fact that overall prices are up approximately 8.8% on a yearly basis.

“Demand for the very limited supply of property could remain high, as the appetite to either get onto the property ladder or for larger properties with home offices and outdoor space continues, and these borrowers could be enticed by the possible savings lower mortgage rates may bring them.

“Competition is evident across the residential mortgage sector, but there is no guarantee that rates will continue to fall, or for how long these record-low deals may be available for, therefore seeking advice to assess the best true cost deal for their own circumstances would be a wise move by any prospective borrower.”

By Jake Carter

Source: Mortgage Introducer

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BoE: Mortgage borrowing rises to £6.6bn in May

Net mortgage borrowing climbed in May to £6.6 billion from £3 billion in April, the latest Bank of England (BoE) data has revealed.

Despite this significant leap, the BoE said borrowing still remained below the record figure of £11.4 billion achieved in March of this year.

Mortgage approvals for house purchases inched up slightly in May to 87,500 from 86,900 in April. This was also lower than the peak of 103,200 in November 2020.

Today’s data also revealed approvals for remortgage – which only captured remortgaging with a different lender – increased slightly to 34,800 in May, from 33,400 in April. This remains low compared to the months running up to February 2020, the BoE said.

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The ‘effective’ rate – the actual interest rate paid – on newly drawn mortgages went up by two basis points to 1.90% in May.

The BoE said this was marginally above the rate in January 2020 (1.85%), and compared to a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained unchanged at a series low of 2.07%.

Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “It’s not surprising that the mortgage market is continuing to perform well, with homebuyers keen to move before the first change to the Stamp Duty holiday at the end of June.

“There’s also a lot of competition amongst lenders, with mortgage rates nearing record lows in some cases – this is of course great news for borrowers”

He added: “We expect figures for June to be even higher, and for activity to return to more normal levels after the threshold for Stamp Duty has been lowered to £250,000.”

Meanwhile, Karen Noye said these figures demonstrated how buyers were ‘soaking up the last of the favourable stamp duty conditions before tapering began’.

“Once the holiday has fully come to an end in October we may enter into a market where buyers choose to wait and see and the number of people looking to buy significantly reduces,” she said.

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But she warned the end of furlough and other schemes could change the landscape going forward.

“For some time, the housing market has been propped up by government schemes and initiatives like the stamp duty holiday and then 95% mortgage scheme, which has encouraged people to borrow at times where they may have chosen to sit on their hands.

“Once the government’s helping hand has been withdrawn, we may see people opt for a wait and see approach and mortgage borrowing could plummet.

“Similarly, part of the reason the market has been so hot as of recent is due to people wanting to move to properties with gardens or home offices in light of the restrictions on movement and working.

“As things get back to normal this frenzy may start to fade and people feel happier to stay put as cities open back up and outside space is lower on the agenda.”

By Kate Saines

Source: Mortgage Finance Gazette

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Lenders hand out most mortgages to first-time buyers in nearly 20 years

Banks and building societies handed out more mortgages to first-time buyers in March than any time since 2002.

Across the UK, 42,330 mortgages were issued to first-time buyers in March, marking the highest monthly total since December 2002 when 44,000 were advanced, according to trade association UK Finance.

Many people who would have taken their first step on the property ladder last year may have put their plans on pause due to the coronavirus pandemic, with the market having been effectively shut for part of 2020.

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Last peak was in July 2002

A total of 58,810 mortgages were advanced in March to home movers, the highest figure since August 2007. The peak month for home mover activity was July 2004 when 93,500 mortgages were advanced.

The peak month for lending to first-time buyers on UK Finance’s records was July 2002, with 54,100 loans.

March 2021 was the original deadline for a stamp duty holiday in England and Northern Ireland, but the period has been extended.

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“Since the housing market emerged from its shutdown last spring, we have seen a remarkable recovery in demand, which continued through quarter one 2021,” said Eric Leenders, managing director of personal finance at UK Finance.

“Existing home owners have taken advantage of the stamp duty concessions, with changing working and living patterns encouraging more to use their existing equity, either to move further afield or to fund further housing purchases for themselves or family,” Leenders added.

By Michiel Willems

Source: City AM

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Number of Mortgage Deals Increases Between April and May According to New Data

The number of mortgage deals available to consumers increased by 85 between April and May, according to new data from Moneyfacts.

According to the organisation, which has just released its Moneyfacts UK Mortgage Trends Treasury Report, the number of deals available rose from 3,842 in April to 3,927. The vast majority of those deals were for those with a five per cent deposit, up from 34 deals in April to 112 in May, following the government’s announcement that it would help people with deposits up to a certain amount. Comparatively, those with a 10 per cent deposit saw the number of deals available to them rise by 41, going up from 440 to 481.

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Eleanor Williams, finance expert at Moneyfacts, said the increases were the result of lenders returning deals to the sector, partly because of the government’s scheme.

Along with the increase in product choice, the average two-year fixed rate on mortgage deals fell slightly between April and May, down from 2.58 per cent to 2.57 per cent. The average five-year fixed rate, however, increased slightly, up from 2.77 per cent to 2.79 per cent.

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Commenting on the results, Vikki Jefferies, proposition director at PRIMIS Mortgage Network, said: “The surge in the number of 95 per cent LTV deals available in the space of a month is particularly encouraging. There is clearly great momentum from lenders to return to the high LTV space – not forgetting those who have signed up to the government’s 95 per cent mortgage guarantee scheme – which is good news for first-time buyers and younger borrowers who are looking for low deposit mortgages.”

BY PETE CARVILL

Source: Property Wire

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Mortgage product choice climbs back toward pre-pandemic levels

Mortgage options for borrowers increased for the seventh consecutive month with the 95% loan-to-value (LTV) market receiving a healthy injection of deals, Moneyfacts.co.uk has revealed.

It said there were now 78 more deals for borrowers with a 5% deposit but the 90% LTV sector also experienced a boost with 41 more products being added to the mix.

The only tier where availability reduced was at 80% LTV, Moneyfacts revealed. It said this could be due to providers shifting focus and increasing the number of products launched in the higher LTV tiers.

Some rates also started looking more favourable, with Moneyfacts’ data revealing, after nine months of increases, the average overall two-year fixed rate reduced by 0.01% to 2.57%.

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However, the equivalent five-year fixed rate for all LTVs increased by 0.02% – a fifth consecutive monthly rise – to 2.79%. Moneyfacts attributed this to the steep rise in the number of traditionally higher-rated, higher LTV products now available.

What’s more, the average shelf-life of a mortgage deal increased by three days to 32, indicating that things may be calming down in the volatile residential sector, with borrowers now having a little longer to secure their chosen product.

Eleanor Williams, finance expert at Moneyfacts, said: “The sense of optimism in the mortgage sector continues, with product choice continuing its climb back towards pre-pandemic levels. After seven months of consecutive increases and 3,927 products now on offer, this represents a 53% rise year-on-year and is the highest this total has been since March 2020 (5,222).

“This positive growth compliments recent Bank of England figures, which show a boom in mortgage borrowing to levels not seen since prior to the financial crash.”

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She added: “Higher LTV products returning and rates reducing couldn’t come at a better time as house prices continue to rocket upwards, but housing supply remains an obstacle for would-be buyers and this shortfall may well continue to drive up house prices.

“Lenders have been vocal of their confidence in the mortgage market as the UK lockdown eases, which is refreshing to see after the turmoil the pandemic created for home movers and those looking to switch their deal for all walks of life.”

Mortgage market analysis (Source: Moneyfacts Treasury Reports)
 May-20Apr-21May-21
Fixed and variable rate productsTotal product count – all LTVs2,5663,8423,927
Product count – 95% LTV4134112
Product count – 90% LTV100440481
Product count – 85% LTV208616625
Product count – 80% LTV430721710
Product count – 75% LTV554766769
Product count – 60% LTV522515527
All LTVsAverage two-year fixed rate2.09%2.58%2.57%
Average five-year fixed rate2.35%2.77%2.79%
All productsShelf life (days)342932
All productsFees (excluding no-fee deals)£985£1,053£1,051
Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfacts Treasury Reports

Source: Mortgage Finance Gazette

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Record mortgage borrowing in March as owners move or improve

UK homeowners borrowed a record £11.8bn more on mortgages than they repaid in March, according to figures from the Bank of England.

This net borrowing level was the highest of any month since comparable data began in 1993.

The market was stoked up by stamp duty holidays and by low mortgage rates.

These factors encouraged some homeowners to move in time to beat the tax relief deadline or to borrow more to improve their current property.

Mortgage borrowing signals future demand to buy homes, and analysts have said that the UK housing market has been “on the boil” during the spring.

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On Friday, the Nationwide Building Society said the average property price had risen by £15,916 in the year to the end of April, to reach £238,831.

Gross mortgage borrowing hit £35.6bn in March as some people tried to beat the end of the stamp duty holidays, which were then extended in England, Wales and Northern Ireland.

Andrew Montlake, from mortgage broker Coreco, said stamp duty relief was having an “insane effect” on the property market.

“This mad March mortgage data highlights the frenzied rush of people to buy in the second half of last year and save thousands of pounds on stamp duty,” he said.

“But the celebrations surrounding the stamp duty holiday may soon ring hollow if the market cools off and people find their savings have been wiped out by the premium they have paid for property. When borrowing is as extreme as this, it never tends to end well.”

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New scheme

In April, some High Street lenders started selling mortgages to borrowers offering a deposit of just 5% under a new government guarantee scheme aimed at helping first-time buyers.

The new scheme will be available to anyone buying a home costing up to £600,000, unless they are buy-to-let or second homes.

The government is offering a partial guarantee, generally of 15%, to compensate lenders if the borrower defaults on repayments.

House hunters, particularly first-time buyers, might be helped in their quest to have enough for a deposit by families and individuals saving more. The Bank of England said deposits into accounts “remained strong in March”. Some £16.2bn more was deposited than withdrawn, the data shows.

Households also continued to pay back more than they borrowed on non-mortgage debt in March, the Bank said. A net consumer credit repayment of £535m was recorded, including people’s borrowing using credit cards, personal loans and overdrafts.

By Kevin Peachey

Source: BBC

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Mortgage lenders prepare to launch new low deposit mortgages

Mortgage lenders in the UK are preparing to launch a wave of ultralow deposit deals on to the market.

Several big high street names have already confirmed their intention to participate in a new UK government-backed five per cent deposit scheme, which was unveiled by the Chancellor in the recent Budget.

Lenders who are participating in the new scheme include Lloyds, Natwest, Santander, Barclays, HSBC UK and Virgin Money.

Some lenders are expected to reveal further details about what they will have to offer in the coming days, The Scotsman reports.

The new mortgage guarantee scheme aims to increase the appetite of lenders across the UK for high loan-to-value lending (LTV) to creditworthy customers.

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It will be available to current homeowners as well as first-time buyers looking for a property for up to £600,000. Borrowers will still need to pass the usual affordability checks.

On the whole, the scheme can be used for new or existing properties and it will be open for applications from later this month until December 31 next year.

The initiative will work by allowing lenders to purchase a Government guarantee that would compensate them for a portion of their losses in the event of foreclosure.

The new scheme will mirror a “tried and tested” initiative which reinvigorated the mortgage market in the recent past.

In 2013, the government launched the Help to Buy mortgage guarantee scheme in response to a similar shortage of low-deposit mortgages following the 2008 financial crisis. The programme helped more than 100,000 households to buy their own home across the UK.

The previous Help to Buy scheme also had the effect of boosting competition in the 5 per cent deposit bracket among lenders who were not part of the scheme.

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They ramped up their low-deposit ranges in order to compete with lenders taking part in the initiative.

Lloyds Banking Group confirmed that its new deals will be available across its brands, Lloyds Bank, Bank of Scotland, and direct from Halifax, as well as through Halifax Intermediaries.

The bank said that two-year and five-year product options will be made available.

A Santander spokeswoman said: “We’re pleased to be supporting the Government’s 95% mortgage guarantee scheme and look forward to sharing full details of the products available shortly.”

A spokesman for Virgin Money said: “We will be an active participant in the Government’s mortgage guarantee scheme and we are due to announce our proposition next month.”

Source: Scottish Construction Now

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Bank of England: Mortgage borrowing reaches five-year high in February

Individuals secured an additional £6.2 billion in mortgage borrowing in February which is the strongest level since March 2016, the latest Bank of England (BoE) figures have revealed.

The latest data showed it was not just net borrowing which was buoyant last month, but there were also a high number of approvals.

The 87,700 approvals, although down on the peak of 103,700 in November 2020, were still well above the monthly average in the six months to February 2020, which was 67,300.

The BoE Money and Credit report for February 2021 also reported approvals for remortgages with a different lender increased slightly from 32,600 to 34,300 between January and February.

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When it came to gross borrowing the figure reached £27.7 billion which was very close the March 2016 figure of £27.9 billion.

The BoE data also revealed the ‘effective’ rate – the actual interest rates paid – on newly drawn mortgages increased by six basis points to 1.91% in February.

It said this was slightly higher than the rate in January 2020 (1.85%), and compared with a series low of 1.72% in August 2020. The rate on the outstanding stock of mortgages remained at series low (2.09%).

The BoE thought the strong borrowing figures were caused by the flurry of activity as buyers rushed to meet the original stamp duty holiday deadline of 31 March.

But John Phillips, national operations director, Just Mortgages and Spicerhaart said thought there were other influencing factors at play.

He said: “This is only part of the story. A year on from the start of the first lockdown, what is clear is that the pandemic has spurred people into action.

“Whether it is those looking to move for more outside space. Or the lack of commute meaning some are choosing to leave the city, in a year where our lives were turned upside down, priorities were shaken up.

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“With the extension to the stamp duty holiday, the reintroduction of 95% LTV mortgages and the furlough scheme running till September, the property market should keep moving at a pace and we may see records broken for the first quarter of 2021.”

Meanwhile Jonathan Sealey, CEO of specialist short term lender Hope Capital, said the figures were also testament to the hard work of everyone involved with the property and mortgage industry.

“All those involved in the sector should take credit for that, and initiatives such as virtual viewings and the introduction of new products during the lockdown, have contributed to the property market staying operational,” he said.

“It’s also been an opportunity for specialist lenders particularly who have been able demonstrate the agility and speed that sets them apart from high street lenders, in ensuring people can get their deals over the line, no matter what else is happening.”

By Kate Saines

Source: Mortgage Finance Gazette

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