The Bank of England’s Q2 2014 Mortgage Lenders and Administrators Statistics were released today. The key factors that conveyancers are advised to observe are as follows:
- 70.1% – proportion of lending for house purchases, 3.7% increase from previous quarter.
- £36.1 billion – gross advances for house purchases, £4.8 billion increase from previous quarter and 33% higher compared with Q2 2013.
- 22.1% – proportion of lending to first time buyers, 2% increase. The value of residential loans advanced to first time buyers increased over the quarter to £11.4 billion, £3.4 billion higher compared with Q2 2013.
- 4.6% – proportion of gross advances at an LTV over 90%, the highest since Q4 2008 and 1% increase from previous quarter.
- 11.9% – proportion of gross advances to borrowers with a single income multiple of more than 4.00x, 30bps increase from previous quarter.
- 28.8% – proportion of gross advances to borrowers with joint income multiple of more than 3.00x, 2% increase from previous quarter.
- 3.4% – proportion of new lending that is a combination of an LTV over 90% and loan-to-income multiple of over 3.5x for single income borrowers (or 2.75x for joint income borrowers), the highest since Q2 2008 and 0.8% increase compared to previous quarter.
David Newnes, director of Reeds Rains and Your Move estate agents, comments, Help to Buy has been a beacon of hope for the households scrimping and saving to draw together a deposit.
Amongst a spate of regulatory changes to mortgage borrowing, the scheme has kept the door firmly propped open for a new charge of higher LTV lending. That’s allowing first-time buyers to continue clambering onto the property ladder.
In the three months to June, borrowers with a deposit worth 10% or less of the total value of their property reached the highest proportion since the end of 2008, and new buyers are increasingly taking centre stage.
But schemes like Help to Buy are also crucial in channelling assistance to the places where it’s most needed — making the biggest splash outside of London and the South East. Extra support is strengthening the teetering recovery in pockets of the UK, where growth is now stalling or never really got into its stride in the first place. In areas like these, sustained demand at the bottom rung of the ladder is paramount to ensure that the recovery radiates out nationwide.
The government should be mindful that additional loan-to-income caps and further untimely intervention don’t cast a shadow over consumer confidence and activity.
