Why is Mortgage Lending Soaring?
Industry News

Why is Mortgage Lending Soaring?

Clock  3 minute read

Carl Shave Carl Shave | June 30, 2018


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A recent report from UK Finance, an industry body that represents almost 300 banking and finance companies, revealed that total mortgage lending in April 2018 increased 13.3% year-on-year, to £20.4 billion. The total number of mortgage approvals also rose by 11% over the same period. The strong figures for April 2018 represented steady growth in both lending and approvals, following a slowdown in lending activity in the month prior.

A number of factors play into this growth in the mortgage market, but perhaps one of the most significant is the increase in remortgage lending, with figures showing that remortgage approvals in April were almost 30% higher than a year earlier. A separate UK Finance report has also indicated that remortgages were on the rise in many parts of the country; in London, where the number of first-time buyer and home mover mortgages both fell in the first quarter of 2018, remortgaging was up 7.6%, to £4.67 billion, compared to last year.

Former RICS residential chairman Jeremy Leaf said: “These are stronger than expected figures bearing in mind other recent results, not just in terms of lending which is a reflection of previous decision making but approvals which demonstrates confidence in the future.”

Mark Harris, chief executive of SPF Private Clients, also commented on the strong remortgage performance: “We are witnessing a highly competitive remortgage market. Lenders are seeking to increase market share, often providing additional incentives to borrowers remortgaging, including free survey and legal packages. The mortgage market is oversupplied, which will continue to drive down lender margins and pricing, which is great for borrowers.”

Remortgages are seeing particular growth in the buy-to-let mortgage market. As landlords are facing increased pressure due to changing tax rules, many are shopping around for better mortgage deals in order to minimise their repayments. The latest Financial Adviser Confidence Tracking (FACT) Index from Paragon revealed that more than half of buy-to-let mortgages from intermediaries in the first quarter of 2018 were for landlords looking to remortgage. Around 60% of landlords said that they were specifically remortgaging to secure a better interest rate, rather than to raise capital. 

Amongst homeowners and landlords alike, the spectre of a possible Bank of England interest rate rise on the horizon is likely a primary driver for those wanting to secure a more favourable deal in advance of interest rates rising across the board. Base rate movement notwithstanding, some analysts believe that mortgage interest rates may be set to slowly rise over the next few months anyway, with the recent ending of the Bank of England’s Term Funding Scheme influencing that shift.

Here at Just Mortgage Brokers, we take a keen interest in trends and shifts in the mortgage market, and pride ourselves in helping our customers find the right deal from the lender that best suits their unique circumstances. Whether you are a first-time buyer, home mover or an existing mortgage holder who wants to get a better deal, contact us today to discuss how we can help find the mortgage that’s right for you.