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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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More Mortgages Agreed by Lenders in Early 2021

Mortgage commitments agreed by lenders were a quarter more at the end of 2020 than at the end of 2019, the private investor platform Hargreaves Lansdown has highlighted.

Advances actually paid in the fourth quarter of 2020) were also up on the same quarter a year earlier, but this time by only 4.2 per cent. In the year as a whole they were unsurprisingly down by 9.8 per cent.

The value of balances in arrears rose by 3.4 per cent in the last quarter and is now just under 1 per cent of all mortgage balances.

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‘The race for space has turned out to be more of a marathon than a sprint’, said Hargreaves Lansdown personal finance analyst Sarah Coles.

‘We’ve been snapping up mortgages at the fastest rate since the onset of the financial crisis – and that was even before we knew the stamp duty holiday would be extended.

‘The mortgage market was booming at the end of last year, and the mortgages being agreed for the start of 2021 were at their highest for 14 years’.

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Meanwhile, arrears are starting to grow, said Coles. But ‘let’s not get ahead of ourselves, arrears are still incredibly low: right now they’re at 0.93 per cent compared to 3.64 per cent in early 2009. However, during the pandemic millions of borrowers have been able to rely on payment holidays, so have been able to avoid paying without running up arrears. Now that support is winding down, anyone who’s still struggling is running out of road. When the FCA asked people in October, 19.6m expected to be struggling to pay the bills or service their debts by April. By the time we get the March figures, arrears could look much worse’.

Source: Landlord Knowledge

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Mortgage options hit highest level since first national lockdown

With lenders continuing to gain confidence, homebuyers and investors seeking mortgages now have the highest level of mortgage options available since March 2020.

Lenders recently launched a range of new mortgage options for property buyers. Currently, there are 3,215 mortgage deals available, according to Moneyfacts. This is the highest number in 11 months, when there was 5,222 deals available on the market.

In the first half of 2020, mortgage options fell sharply. Many lenders withdrew mortgages while they reassessed the level of risk they could take in the wake of the COVID-19 pandemic. In particular, borrowers with smaller deposits had few mortgage deals available.

During the second half of 2020, the mortgage market started recovering. Since October, the number of mortgage options has grown by 42%. This is the biggest four-monthly increase since 2007 .

Additionally, at the end of 2020, mortgage approvals were at the highest level since 2007. The housing market remained busy as homebuyers and property investors have been rushing to beat the stamp duty holiday deadline.

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Mortgages with smaller deposits available

Choice in mortgages is particularly increasing for borrowers with smaller deposits. In the past few months, the most significant rise was for 90% loan-to-value (LTV) mortgages. This LTV mortgage where borrowers only need to put down a 10% deposit is typically used by more first-time buyers.

Eleanor Williams from Moneyfacts says: “Those with 10% deposit or equity might be especially pleased to note that this tier has, for a second month, seen the largest uplift in availability.

“With products at this level often favoured by first-time buyers and traditionally being seen as higher risk for providers, willingness to extend lending in this risk bracket could be an indication that lenders have confidence in the sector, despite ongoing, wider economic uncertainty. This is echoed by the average two and five year fixed rates at 90% LTV seeing the largest fall of all the lending tiers, reducing by 0.09% and 0.07%.”

Mortgage interest rates stabilising

Average interest rates have increased across all LTVs. However, the average rate has increased only fractionally, which shows rates are stabilising. This is likely due to increased competition in the mortgage market. It also shows lenders are gaining more confidence and less risk averse than before.

Eleanor Williams comments: “At 2.53%, the two year fixed overall average rate is now 0.11% higher year-on-year, while the five-year equivalent at 2.73% is equal to where it sat in February 2020.

“Therefore, while these rates have risen again, the increases are of just 0.01% and 0.02% this month, which may be a sign of the start of some stability in the market, especially when compared to the drastic monthly increases witnessed over the course of last year.”

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Choosing the best deals

Moneyfacts advises borrowers to take into account a number of factors when choosing a mortgage deal. Don’t look at just the interest rate. It’s important to also take product fees and incentives into consideration.

Recently, two-year fixed products have been particularly popular. Two-year fixed deals typically have lower interest rates than five-year fixed deals. However, for some, the five-year option could be a better choice in the long run. And the interest rate gap between two and five-year fixed rates mortgages has dropped to its lowest level since 2013, according to Moneyfacts.

As the economy and mortgage market remains uncertain, five-year fixed deals could provide longer-term stability. However, this depends on the borrower’s needs. Seek independent financial guidance to find the best mortgage deal for your circumstances.

By Kaylene Isherwood

Source: Buy Association

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Mortgage Lenders Show Confidence, A Research By MoneyFacts Has Found

There are now more mortgage deals available than since the start of the Coronavirus pandemic began impacting the UK economy last March, MoneyFacts has reported.

Its latest UK Mortgage Trends Treasury Report, found that there are currently 3,215 mortgage deals available, the highest number yet since March. Then there were 5,222 deals in the market.

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The biggest rise in deals over the last few months is in 90 per cent loan to value deals.

While average mortgage interest rates have risen across all LTVs, the average for two and five year 90 per cent LTV fixed mortgages fell month-on-month from 3.65 per cent and 3.79 per cent in January to 3.56 per cent and 3.72 per cent in February respectively.

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‘Those with 10 per cent deposit or equity might be especially pleased to note that this tier has, for a second month, seen the largest uplift in availability. With products at this level often favoured by first-time buyers and traditionally being seen as higher risk for providers, willingness to extend lending in this risk bracket could be an indication that mortgage lenders have confidence in the sector, despite ongoing, wider economic uncertainty’, said Moneyfacts’ Eleanor Williams.

‘This is echoed by the average two and five year fixed rates at 90 per cent LTV seeing the largest fall of all the lending tiers, reducing by 0.09 per cent and 0.07 per cent’.

Source: Landlord Knowledge

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Low deposit mortgage deals at six-month high

The mortgage market has shown signs of recovery as the number of 90% loan to value (LTV) products reached a six-month high while overall choice has improved.

The number of low deposit mortgages almost doubled from 72 to 160, according to a Moneyfacts report.

However, those who require a 90% LTV mortgage still have fewer options than those with more money to put down. Borrowers who qualify for an 85% LTV mortgage have 439 products to choose from and 75% LTV borrowers have 629.

In total, there are currently 2,893 residential mortgages on the market, the most recorded since April 2020 when there were 3,192 mortgages available. This is up slightly from the 2,782 on the market last month.

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Rates on the up

The average rate for a two-year fixed mortgage across all LTVs rose for the sixth month in a row by 0.03% to 2.52%, the highest average rate since January 2019.

The average two-year fixed rate is also 0.08% higher year-on-year and a 0.53% rise on the record low seen in July. The record low rate coincided with a period when there were just 70 high LTV products on the market, where higher rates are typically seen.

The average rate for a five-year fixed deal across all tiers also increased in January from 2.69% to 2.71%. However, this was lower than the average rate of 2.74% during the same month last year.

As well as returning to the market to serve borrowers with a smaller deposit, lenders also appear to be treating those in need of a 90% LTV more favourably by reducing borrowing costs.

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The average rate for a two-year fixed mortgage at this tier dropped from 3.79% to 3.65% over the month while a five-year fix fell from 3.92% to 3.79%.

Eleanor Williams, spokesperson at Moneyfacts, said: “Following the sharp drop off in availability in 2020, it is positive to see we are beginning 2021 with the total number of mortgage deals rising for the third consecutive month.

“Not only is the increase in product choice a positive for borrowers, but it seems that a measure of competition may have started to return to some sectors as well.”

She added: “This improvement in options for mortgage borrowers has occurred at a time when high levels of borrower demand have been fuelled by those hoping to benefit from the stamp duty holiday and by those who re-evaluated what they want from a home and were part of the unleashed demand that arose after the first lockdown in 2020.”

Written by: Shekina Tuahene

Source: Your Money

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Mortgage approvals reach to highest level since 2007

The number of mortgage approvals in November 2020 increased to the highest level since August 2007, according to the Bank of England Money & Credit data.

The number of mortgage approvals reached 105,000 in November, with net mortgage borrowing also increasing to £5.7bn.

In addition, effective interest rates on new mortgage borrowing ticked up to 1.83%.

Household deposits increased by £17.6bn in November, however there were significant withdrawals from national savings and investment accounts according to the data.

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Bank borrowing by small and medium-sized businesses was noted at £1.8bn, while net borrowing by large businesses was £0.2bn.

Tomer Aboody, director of property lender MT Finance, said: “The Bank of England figures provide further confirmation of the prevailing strength and confidence in the housing market, with the highest mortgage approval levels and further borrowings in over a decade.

“Households are looking to maximise space in their current homes by extending, converting lofts and refurbishing, as more time is spent at home.

“With mortgage rates so low, taking advantage of existing equity in homes has enabled people to borrow more for living expenses as they also deal with concerns over future employment and income, with so many industries affected by the pandemic.

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“Household deposits have increased with people saving, due to not being able to go away, out for dinners or even shopping.

“Consumers are being frugal with their spending and considering the threat of a possible recession on the horizon.

“How the government will look to tackle any forthcoming concerns with the Budget, the end of furlough and stamp duty relief will be interesting, since this new wave of the virus has come as a surprise and therefore further potential assistance is desperately needed.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the mortgage market improved considerably at the end of the year but we shouldn’t look too closely at these figures because they reflect a period of particular improvement in market activity of the previous few months.

“Moves have slowed since although many are still trying hard to take advantage of the stamp duty holiday, which will be ending very soon.

“The likelihood of further lockdown restrictions will bring short-term pain to the market which hopefully won’t be reflected in reduced values.

“Certainly the greater availability of a vaccine, on the other hand, will provide some optimism.”

By Jake Carter

Source: Mortgage Introducer

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Mortgage approvals at 13-year high

UK lenders approved 97,532 mortgages in October, the most since September 2007, the Bank of England’s Money and Credit data shows.

The housing market has gotten busier, as there were 92,091 given the green light in September, compared to 85,704 in August.

Before the pandemic the were 73,384 mortgages approved in February, before the amount fell as low at 9,335 in May.

Nitesh Patel, strategic economist for Yorkshire Building Society, said: “The housing market continues to defy economic logic, despite challenging economic conditions caused by the global Covid-19 pandemic and uncertainty over the UK’s trading deal with the EU.

“Pent-up demand from the lockdown has been driven by buyers looking for bigger homes that accommodate home working and more garden space, as well as the Stamp Duty cut may have drawn in opportunistic buyers who were previously discouraged by high transaction costs.

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“There is good reason to believe that homeowners with large amounts of equity in their homes are the most active, with first-time buyers making up a smaller proportion of approvals.

“These are temporary factors, particularly the Stamp Duty cut which, as it currently stands, ends on 31 March next year. With the economy set to remain weak and unemployment likely to rise when the job support scheme comes to an end, we should see housing activity start to decline in the second quarter of 2021.”

But Richard Pike, sales and marketing director at Phoebus Software, said: “It is not only the stamp duty saving that is driving the market, there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.

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“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year. With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”

Tomer Aboody, director of property lender MT Finance, said: “This is an opportunity for many would-be buyers who in the past couldn’t afford or preferred not to buy, to go and purchase, locking themselves into a longer-term mortgage rate at an affordable level, and with a low enough deposit so that it doesn’t impact their savings too much. This, coupled with the stamp duty break, has fuelled the market and helped push up property prices.

“Unlike 2007, we should be confident in the banking sector, which is highly liquid, as well as confident in the market. We may be living with a pandemic but hopefully this will be under control before long, allowing us to carry on with our lives before too much damage is done to the economy.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Low deposit mortgage deals double as lenders return to market

Mortgage borrowers with a 10% deposit now have almost double the choice of deals compared to September, as lenders have started trickling back into the market, analysis reveals.

There are 80 mortgage products available to borrowers today with a deposit or equity of 10% required, according to Moneyfacts.

At the start of September, there were only 44 deals available on the same basis.

In the past week alone, the number has jumped from 65 to 80, the data revealed.

Atom Bank, TSB and Platform are among the players to have added 90% Loan to Value (LTV) mortgages to the market this week.

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And Nationwide today announced it would expand lending at this level beyond first-time buyers.

The market for high LTV lending (low deposit) collapsed as the pandemic struck earlier this year, leaving many borrowers who could not scrape together bigger deposits with no option but to delay transactions.

In recent months, some lenders returned to 90% LTV lending for short stints of just a couple of days or, in some cases, only hours in an effort to manage volumes.

As more lenders filter back into the space, the pressure appears to be easing.

However, lending at 95% LTV remains very limited with still only eight products currently on the market.

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Eleanor Williams, spokesperson at Moneyfacts, said: “It is really encouraging that we are beginning to see more lenders relaunch products in the 90 per cent LTV bracket, especially for those borrowers with lower levels of deposit or equity who may have felt they had little to no options to move forwards with of late.

“We have seen a few lenders put their toe into the water of high LTV lending with short-term, limited edition products which were only on offer for a day or so, therefore seeing further providers enter this arena could be demonstrating that mortgage providers are managing their operational demands and are keen to cater to these borrowers.

“Those who are keen to take advantage of one of these 90 per cent LTV deals could do well to secure the support and guidance of a qualified, independent adviser who will be aware of the most up to date products available and be on hand to help borrowers navigate the mortgage maze.”

Written by: Lana Clements

Source: Your Money

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Mortgage payment holidays extended until July next year

Mortgage lenders have extended mortgage payment holidays until 31st July 2021 for those whose finances have been affected by the pandemic.

People have until 31st March 2021 to apply, while they need to do so before 31st January to get a six-month deferral.

Those who have already taken a six month payment holiday are ineligible, and will need to contact their lender for “tailored support” instead.

Eric Leenders, managing director of personal finance at UK Finance, said: “Lenders are continuing to provide unprecedented levels of support to help customers through the Covid-19 crisis, with over 2.6 million mortgage payment deferrals already granted.

“As the impact of the pandemic continues to be felt across the country, the banking and finance industry stands ready to deliver ongoing assistance to those in need.

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“While it will always be in the long-term interest of customers who are able to do so to resume making payments, all lenders will be providing tailored support for anyone who is still struggling.

“There are a range of different ways to get in touch, including through online chat, social media and mobile and banking apps.

“As you will appreciate, phone lines are very busy at this time and we would encourage only those customers who are facing an immediate issue with their finances to call their provider in the first instance.”

Lenders will not enforce repossessions, or attempt to get a warrant for possession before 31 January 2021.

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Robin Fieth, chief executive of the Building Societies Association (BSA), said: “Whilst the best advice is always to pay your mortgage if you are able to, anyone who is struggling to do this could benefit from the extension to the mortgage payment deferral scheme or other tailored support that is available from lenders.

“It’s important that customers discuss their situation with their lender as soon as they become concerned, and before they miss a mortgage payment. Lenders will do everything in their power to help borrowers in financial difficulty at this challenging time – keeping people in their homes is the objective.

“The FCA has been in listening mode throughout the pandemic and their final guidance includes industry suggestions, specifically the ability to top up to six months even if a borrower has had two shorter deferral periods already and not excluding borrowers who have missed a payment after a deferral period from the scheme.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Mortgage searches on the rise as second lockdown began

Twenty7Tec has released figures on the state of the mortgage market one week after the second UK lockdown began.

The findings showed that weekly mortgage search volumes are currently at 87.79% of the year’s highest figure, up 6.8% on the week before.

Weekly buy-to-let (BTL) mortgage search volumes are at 92.09% of the year’s high, up 8.0% on last week.

Weekly residential mortgage search volumes are at 87.56% of the year’s high, up 6.8% on last week.

In regard to ESIS documents, weekly mortgage ESIS documentation figures are currently at 91.42% of the year’s highest figure, up 7.5% on the week before.

Weekly BTL mortgage ESIS documentation figures are currently at 89.75% of the year’s highest figure, up 7.8% on the week before.

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Weekly residential mortgage ESIS documentation figures are currently at 90.13% of the year’s highest figure, up 7.4% on the week before.

James Tucker, chief executive of Twenty7Tec, said: “Each time we go into a lockdown, regional or national, there is a drop-off in the volume of mortgage searches that takes place, and also a drop-off in the number of ESIS documents prepared.

“The dip in volumes actually happens in the few days before the lockdown begins as customers focus on dealing with the practical elements of a lockdown.

“Then, immediately as the lockdown starts, mortgage search volumes begin to rise again.

“We’ve seen it again and again this year on a UK-wide, home nation and regional level before and just after we enter lockdown.

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“Any drop is then is consistently mirrored by a spike of mortgage search volumes within a day or two of the lockdown beginning.

“There was a definite blip in activity last week as people mentally prepared for lockdown 2.0.

“For context, last week’s drops were less than we’d expect in a bank holiday week.

“In lockdown 2.0, we are still seeing search volumes higher than we did in pre-lockdown Spring.

“That feels like a world away now, but was, at the time, incredibly busy for all our clients.

“BTL currently forms 19.11% of all searches in the past week and 20.87% of all documents prepared against in the past week.

“BTL searches volumes have been relatively steady all year and those searches are converted into ESIS documents more often than residential searches.”

By Jessica Nangle

Source: Mortgage Introducer

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