UK Finance data shows that gross mortgage lending fell in August on a yearly basis.
In total, £24.1bn was lent out in the summer month, down 1.2 per cent from the £24.4bn total lent out a year earlier.
However, UK Finance’s report also shows that the total number of mortgage approvals by the main high street banks rose 0.7 per cent compared to August 2017 (with non-seasonally adjusted figures being 83,933 compared to 84,557), with remortgaging increasing by 9.2 per cent (29,736 compared to 32,457).
Furthermore, the data shows that in August 2017 there were 44,474 house purchases, and 42,581 shifted a year later – a drop of 4.3 per cent.
UK Finance director Peter Tyler says: “Remortgaging continued to dominate in August, as homeowners took advantage of a competitive market to lock into attractive deals.”
Commenting on the numbers, SPF Private Clients chief executive Mark Harris comments: “With many would-be buyers holding off making a decision until Brexit is resolved one way or another, lenders are battling for a relatively small pool of borrowers and are having to reduce rates accordingly. Barclays, HSBC, Halifax and TSB are among the big names to have reduced the cost of fixed-rate mortgages recently, and we expect this trend to continue as lenders try to boost business before the end of the year.”
North London estate agent and former RICS residential chairman Jeremy Leaf adds: “At first glance these figures look quite encouraging but when you appreciate that a substantial part of the increase in lending is to do with remortgaging in anticipation of higher interest rates, the picture is not so rosy.”
Continuing on the theme of uncertainty, Just Mortgages and Spicerhaart group operations director John Phillips concludes: “While the whole country is probably sick to the back teeth of talking about Brexit, it is clearly affecting the mortgage market. There are fears that borrowing may become more expensive post-March, so this could also be a factor in the rise in remortgaging. Plus, it could also be part of the reason why house purchase has fallen. I say this because we know people want to move, but many are reluctant to because they don’t know what will happen in terms of the Brexit negotiations.
“I think stamp duty is still playing its part too; first-time buyers have really benefited from the freeze in stamp duty, but the rest of the market is still faced with huge bills if they want to move – even older people looking to downsize have a huge tax bill to contend with. I’ve said it before and I’ll say it again, with so much uncertainty in the market, people need incentives, and there is an easy option; suspension of all stamp duty. This will give the property sector the boost it needs in the run-up to Brexit.”
Finally, bringing up an issue that continues to be debated, Phoebus Software sales and marketing director Richard Pike says: “Unless you are a first-time-buyer, there seems to be little help for anyone further up the ladder, so perhaps the Chancellor will take heed of industry calls to look at stamp duty to help free up the market. Or will the health of exchequers purse be the overriding influence, no matter the effect on the health of the housing market?”