Hype surrounds 2013 Mortgage Figures

Hype surrounds 2013 Mortgage Figures

2013 started with claims that the UK had recorded the best lending on mortgage figures in five years, but these claims by the UK Council of Mortgage Lenders (CML) are being disputed.

According to the CML, a total of 38,300 loans were advanced for residential property purchases in January, the highest for the month since 2008 when 47,800 loans were advanced. The January performance came despite a marked drop from December 2012 when 45,900 mortgage loans were advanced.

Now critics have suggested that the CML’s mortgage figures were pure hype and speculation as mortgage approvals, and not actual monetary advances, were actually down in January this year, and no figures were released for the UK Buy To Let mortgage market for the same time frame.

Mortgage figures for approvals on residential property purchases appeared to be up 11% compared with January 2012 when there were 34,600 mortgage loans approved for residential property purchases and activity by first-time buyers and home movers both increased.

However, remortgaging was 23% lower than the year before, and despite the rise in first-time buyer mortgages, these remortgage figures were still less than half their best level recorded in 2007.

There were 15,900 mortgage loans approved for first-time buyers in January 2013, down 18% from figures released for December 2012 but the same approval rates were actually 24% up on January 2012 figures, providing the CML with the largest January total since January 2008, when there were 17,700 first-time buyer mortgage loans approved.

It means that in January 2013, first-time buyer mortgages accounted for 42% of all residential property purchases. However, property buyers were still having to fund large deposits, with 80% Loan To Value (LTV) mortgage loans providing the baseline for normality, but FTB’s were buying residential properties at the cheaper end of the residential sales market.

Home mover activity rose only slightly year on year in comparison, up 3%, but a 16% fall from December 2012.

Paul Smee, CML’s Director General, said of the data: “Seasonal factors clearly had an impact on lending figures in January, but it still remains the best start to a year since 2008.”

The Bank Of England (BoE) also fuelled the controversy over the Council of Mortgage Lenders figures when it announced its latest stand alone Lending to Individuals statistics.

The BoE data for January 2013 showed that lending rose by £0.6 Billion (GBP) compared to £0.8 Billion (GBP) in the previous 6 month average.

Within that that data, mortgage lending secured on residential dwellings rose only by £0.1 Billion (GBP) to a gross amount of £12.3 Billion (GBP), compared to previous 6 month average of £11.8 Billion (GBP).

Repayments in January were £12.5 Billion (GBP), up from the 6 month average of £11.3 Billion (GBP).

The Bank of England also stated that the number of mortgage approvals for residential property purchases declined to 54,719 during January 2013, but this was an increase on the previous 6 month average of 51,344 mortgage approvals.

Mortgage approvals decreased on remortgages in January 2013 down to just 25,573, which was also lower than the previous 6 month average.

The controversy over the data follows the news that, despite the launch of the Governments Funding for Lending scheme (FLS), many banks and building societies cut their overall lending in the last quarter of 2012.

Charles Haresnape, managing director of Residential Mortgages at Aldermore, said: “It’s encouraging to see that year-on-year lending figures have made a strong improvement. Funding for Lending is starting to make an impact, especially for those wanting to buy property, such as first-time buyers. Let’s hope this trend continues throughout the year and that we see a gradual return of consumer confidence.”

However, Andy Knee, of property services firm LMS, was not impressed by the latest CML figures, stating: “The CML has chosen to focus on the purchase market in their commentary because it paints a more positive picture of the year ahead; however, in reality, January was very a poor month for completions. Although mortgage lenders have made great strides in expanding their product offerings for residential house purchasers and first-time buyers in the last year, reflected in growth of 10.7% and 24% respectively for these sectors, the remortgage market has contracted by as much as a fifth. According to the Bank of England figures released at the beginning of this month, remortgage approvals in January were down 6% on December and remained less than 85% of 2011 levels. House purchase approvals were also down against the same time last year, all of which suggests that the optimism of the CML may be compromised in the coming months.”

Despite the controversy surrounding the actual mortgage approval figures, the news still provides evidence that the UK residential property market is continuing to show signs of recovery, something that buy to let property investors have known for a while.

There will never be a better time to get into UK property and existing landlords who want to expand their rental portfolios and new property investors who are looking to purchase rental properties in order to appreciate excellent rental yields are trying to get the best Buy To Let mortgage deals available.

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