August 12th, 2014
Total mortgage borrowing for the second quarter of 2014 totalled £51.4bn, in figures released this week by the Council of Mortgage Lenders – some 11% higher than the year’s first quarter.
There were also 28,600 first time buyers applying in June, the highest level since December 2007, pre-credit crunch.
Paul Smee, director general of the CML, said: “For the second month running since new FCA rules took effect, lending characteristics remain similar to the market beforehand.
“We now feel confident that, as we would hope, the MMR effect is more a gentle dampener than a hard brake.
“As we recently suggested in our revised forecasts, lending levels should continue to increase modestly over the course of the year.”
The news is not all positive however. Remortgage lending for Q2 was actually 11% lower than in Q1. Taj Kang, director of specialist broker Contractor Mortgages Made Easy, looks at why.
“The fact that mortgage borrowing is continuing to climb is good news for the wider housing market, however remortgage levels remain low.”
“There are a number of reasons for this. The obvious one comes in the form of tightened lending criteria in the wake of April’s Mortgage Market Review, however that only tells part of the story.”
“For most lenders, if you were only considering a simple switch to a new mortgage product, this is not counted as ‘new’ lending, and so is not reflected in remortgage statistics. This is generally seen as the path of least resistance and in part explains why remortgage business is usually somewhat lower than new borrowing.”
“However, since MMR took effect in April, we are seeing fewer and fewer lenders being able to perform simple product switches for Contractors without new, full, affordability checking, which can be problematic if your circumstances have changed since you originally bought the house”
“This can lead to a feeling of being trapped with your current lender, and being stuck on expensive SVR’s.”
“All is not lost however, now is the time to engage a broker to investigate your options elsewhere. It may well be that there is a more cost effective option with a different bank, potentially one that you would never have known about by looking on the high street.”
“Especially in the case of a Contractor, where lending criteria varies greatly from bank to bank, and with new lenders joining the market continually, it really is a no-brainer to let a good broker help you, and thoroughly investigate all options. You could be missing out.”
By utilising the services of a specialist mortgage broker, you could not only see what better options are available from your existing lender, but potentially realise the real-time value of your property, by obtaining a lower loan-to-value product with a different lender, thereby saving more money that you initially thought.
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080