1 National Mortgage Index For immediate release September 2017 Reporting on August 2017 data National Mortgage Index Brian Murphy Head of Lending Mortgage Advice Bureau Little sign of a summer lull In a month underpinned by highly motivated buyers, we saw little evidence of August being quiet due to the summer break. Last month s data suggests that many homeowners decided to take the opportunity to review their finances and remortgage, or were motivated to move home. We saw the UK property market continuing at a steady pace, very much in line with previous months with only a slight movement on some key metrics, consistent with seasonal expectations. Key indicators are: Average purchase price only slightly lower in August than July, dropping by 1.2% month on month Marginal change in remortgage loan size, increasing by 0.6% month on month Average FTB property purchase price decreased slightly to 208,994 in August 17, from 209,864 in Mortgage Advice Bureau data is based upon mortgage applications, therefore this provides a reliable barometer in terms of consumer activity. Going into the summer months, many had expected to see a marked dip in both activity and prices across the board, due to a combination of anticipated consumer concern with regards to the current political climate, and also economic factors such as slow wage growth hampering affordability. Whilst these factors have perhaps seen discretionary buyers leave the market for the last few months, we are still seeing a healthy number of those purchasing due to life circumstances, e.g. moving home due to work or family factors, together with a noticeable upswing in First Time Buyers taking advantage of the fact that fewer landlords are adding to their portfolios at the current time, meaning that there is less competition for entry level stock in many areas of the country. These factors have led to the volume of residential transactions remaining steady for the last three months (June, July, August) at over one hundred thousand transactions per month. Of course, it s normal to see a slight cooling in house prices over the summer months, as typically it s a quieter period with properties taking longer to sell, therefore vendors tend to price slightly more competitively in order to secure a buyer. However, in some areas of the UK, an upwards movement in pricing has been observed, supporting the fact that prices remain robust in a number of towns and cities. With independent industry bodies such as RICS suggesting in their latest residential market survey that they anticipate the current levels of available stock across most parts of the UK to remain at current historically low levels for the foreseeable future, it s likely that as we move into the start of the autumn the current constant picture will remain, perhaps assisted by those who are now looking to ensure that they are moved into their new home and settled before Christmas.
2 ON Average purchase loan 171,846 in August 17, 1.7% lower than in July ( 174,787) and also lower than when the average loan was 173,272. ON Amount of purchase applicants who opted for fixed rate products In August 17, 96% of borrowers fixed their mortgage, unchanged on and a slight increase on August 16 (90%). Typical LTVs Remain unchanged month on month at 70%, and also unchanged year on year from 70% in August 16. Average applicant age 36 years old, unchanged month on month and unchanged year on year. 43 yrs Remortgage 45 yrs Buy-To-Let 31 yrs First Time Buyer ON Change in the average purchase price Slightly lower in at 247,129, from 250,289 in. ON Change in average purchase salaries 36,103 in, broadly unchanged on Jul 17 ( 36,251) and similar to ( 36,645).
3 Remortgage ON Average remortgage loan 176,566 in, an increase of 0.6% on ( 175,489) and an increase on ( 173,800). ON Amount of remortgage applicants who opted for fixed rate products In August 17, 94% of borrowers fixed their mortgage, unchanged month on month and up 9.3% on August 16 (86%). Typical LTVs Increased slightly in to 55% from 54.5% in July, and increased by 1.7% on (54.1%). Average applicant age 43 years in, unchanged month on month and a slight increase on (42) 45 yrs Buy-To-Let 36 yrs 31 yrs First Time Buyer ON Change in the average remortgage property value A slight decrease to 320,952 in from 322,009 in, and a decrease of 0.1% on ( 321,276). ON Change in average remortgage salaries A slight increase in at 43,928 from ( 42,007) and a slight increase on ( 42,378).
4 Buy-To-Let ON Average BTL purchase loan 135,160 in, 1.1% lower than in ( 136,692) and 3.1% lower than in ( 139,516). ON Amount of BTL purchase applicants who opted for fixed rate products In, 92% of BTL borrowers fixed their mortgage, down on (95%) compared with 84% of BTL borrowers who fixed their mortgage in. Typical LTVs In August 17, the average BTL purchase LTV was 68%, unchanged month on month and year on year. Average applicant age 45 in August 17, unchanged month on month and one year younger than August 16 (46). 43 yrs Remortgage 36 yrs 31 yrs First Time Buyer ON Change in average BTL purchase price 199,483 in from 202,220 in, and reduced year on year from 207,703, an annual decrease of 3.95%. ON Change in average BTL purchase salaries Broadly unchanged in at 39,532 from 39,506 in, and up slightly from ( 37,536).
5 First Time Buyers ON Average FTB purchase loan Broadly unchanged in at 152,054 from 152,201 in. ON Amount of FTB purchase applicants who opted for fixed rate products The amount of First Time Buyers who fixed their mortgage remained unchanged month on month in August 17 (98%). Typical LTVs Dropped slightly from 74% in to 73% in. Average applicant age 31 in August 17, unchanged on August 16. 45 yrs Buy-To-Let 43 yrs Remortgage 36 yrs ON Change in the average FTB purchase price Down from 209,864 in to 208,994 in, a slight decrease of 0.31%. ON Change in average FTB purchase salaries Slightly down from 31,190 in to 30,945 in. NB: Figures are based on June 2017 and July 2017 data
- 6 Regional Loan Analysis Increase from previous month Decrease from previous month NORTH WEST Av. Loan 126,996 Av. Loan 127,333 Monthly Change -0.3% Av. Loan 128,862 Annual Change -1.4% WEST MIDLANDS Av. Loan 175,654 Av. Loan 177,475 Monthly Change -1.0% Av. Loan 165,668 Annual Change 6.0% WALES Av. Loan 127,520 Av. Loan 124,438 Monthly Change 2.5% Av. Loan 119,506 Annual Change 6.7% NORTH EAST Av. Loan 121,470 Av. Loan 123,590 Jul 17 Monthly Change -1.7% Av. Loan 117,069 Annual Change 3.8% SCOTLAND Av. Loan 142,722 Av. Loan 143,981 Monthly Change -0.9% Av. Loan 151,208 Annual Change -5.6% YORKS & HUMBER Av. Loan 148,636 Av. Loan 149,906 Monthly Change -0.8% Av. Loan 140,312 Annual Change -1.4% EAST MIDLANDS Av. Loan 140,298 Av. Loan 139,275 Monthly Change 0.7% Av. Loan 133,494 Annual Change 5.1% EAST of ENGLAND Av. Loan 157,076 Av. Loan 162,311 Monthly Change -3.23% Av. Loan 136,197 Annual Change 15.3% SOUTH WEST Av. Loan 165,307 Av. Loan 165,977 Monthly Change -0.4% Av. Loan 161,562 Annual Change 2.3% SOUTH EAST Av. Loan 217,108 Av. Loan 223,608 Monthly Change -2.9% Av. Loan 224,166 Annual Change -3.1% GTR LONDON Av. Loan 339,712 Av. Loan 348,524 Monthly Change -2.53% Av. Loan 371,504 Annual Change -8.6%
7 Regional Market Commentary Mortgage Advice Bureau advisers from around the UK give their views... Rachel Geddes - London Following on from a trend we noticed in July, we saw a lot of First Time Buyers in August, noticeably higher than in previous months. We would suggest that this is due to the fact that a lot of people buying their first home have spent the last year or so saving their deposit and waiting for the right time, and with mortgage rates as low as they are currently, coupled with more properties coming onto the market at entry level over the summer, August provided the ideal opportunity for them to make their move. Elsewhere, we saw a lot of clients who were moving home and upsizing, with many who are already living in a property that they are going to be renting out and are looking to lock into a five year fixed rate deal, as their priority is securing the best rate for as long as possible to mitigate any uncertainty around a potential interest rate rise in the coming months. This is particularly prevalent for those with larger mortgages, for example a million pounds plus. On the Buy To Let side, we saw the anticipated last minute rush of professional investors who, having done their homework, were aware of the change in lending legislation for portfolio landlords as of the end of September, and therefore either decided to buy further properties or re-gear existing portfolios whilst it s still relatively easy to do so. In terms of property values in London, asking prices still remained realistic rather than aspirational in August, probably due to the fact that more stock came to the market in August than in recent months, therefore vendors have had to maintain reasonable expectations in order to sell. This, combined with a lot of new build developments completing over the summer is helping to ease the shortage of stock that we ve seen over the last year or so, and is a picture which is quite possibly set to continue as we move into the Autumn. Richard Hullin - Swansea Surprisingly, most of the mortgages we arranged last month were for home purchase, and we saw a lot of rushed transactions, with families keen to get in to their new home and settled before the start of the new September term. First Time Buyers continue to increase locally, which is really encouraging to see as they generally underpin the rest of the market. On the remortgage side, it s becoming evident that more and more homeowners are beginning to get the message that they can save money by going for one of the exceptionally low fixed rate deals. We have noticed a decrease in Buy To Let borrowing in recent months, mostly due to the tax changes which are now beginning to have an impact, although the serious landlords we are assisting seem to be moving towards setting up private limited companies as a way to keep their property investments viable. Estate agents locally are still reporting shortages of stock, so properties that are available are selling quickly and for full asking price which is keeping values at their current level, a situation that will probably continue until such times as more vendors come to the market. Lisa Berrido - Manchester Business in August was consistent with the same time in previous years; slightly quieter than July due to holiday season, but given that it was on par, if not slightly busier than the same time last year for us, this was no cause for concern. We saw a significant increase in First Time Buyers in August, as well as a lot of second steppers and family movers, probably taking advantage of the summer holidays to move home and get settled before the start of the new school term. We also saw a steady level of clients remortgaging in August, and have noticed that more and more of our clients are being tempted off their current SVRs with the range of historically low deals on offer. Local market confidence remains strong, and demand at all levels remains very apparent. Homes continue to sell at asking price, providing that they are priced realistically, with multiple viewings and offers on many properties and given that there is still a shortfall of stock available to buy, it s quite possible that this situation will continue for the foreseeable future. Aaron Frizzel - Edinburgh Activity levels have been steady and not affected at all by the summer holidays. Home mover numbers have remained at a steady level for the past few months, with an even mix of First Time Buyers and families moving up the ladder to bigger homes. As in the past few months, we would suggest that these decisions are generally being driven by lifestyle factors, such as having to move to a certain catchment area or needing to move to a larger property, and the current economic and political climate doesn t have a bearing on the process. We re still assisting clients with Buy To Let mortgages, which underscores that there is still demand in the local area for quality rental stock and yields are still very satisfactory, meaning that it s still a feasible investment strategy. In terms of local property values, most homes are selling at or over asking prices a consequence of the fact that there is still not enough property to satisfy demand, which has been very much the picture for most of the year to date.
8 Contact Details The National Mortgage Index The monthly National Mortgage Index has been created by mortgage broker Mortgage Advice Bureau to provide the most comprehensive overview of the UK mortgage market by an mortgage broker. For more information contact: Kate Hall at Mortgage Advice Bureau: M 07399 464640 T 01332 200020 Extn 2123 E kate.hall@mab.org.uk W Breakdown of regions North East: Northumberland Cumbria Tyne & Wear Cleveland Yorkshire & Humber: North, West and South Yorkshire Humberside North West: Lancashire Greater Manchester Merseyside and Cheshire East Midlands: Derbyshire Nottingham Lincolnshire Leicestershire West Midlands: Shropshire Stafford West Midlands Warwickshire Hereford & Worcester East of England: Norfolk Suffolk Cambs South East: Essex Herts Beds Bucks Oxon Berks Surrey Hants West & East Sussex Kent South West: Glos Avon Wilts Somerset Devon Dorset Cornwall Wales: All Greater London: All Scotland: All About Mortgage Advice Bureau The National Mortgage Index is based on monthly applications data compiled from over 1000 advisers across the UK. All figures quoted are three month averages unless otherwise specified. Mortgage Advice Bureau is a mortgage network and the UK s best-known broker brand, winning over 70 national awards for the quality of its advice and service in each of the last five years. It has over 1000 advisers offering expert mortgage advice on a local, regional and national level to UK consumers. Mortgage Advice Bureau handles over 12bn of loans annually. It was the first and is currently the only mortgage intermediary to have floated on the London Stock Exchange, having joined the Alternative Investment Market (AIM) in November 2014. 1 Based on Opinium Research, Summer 2017.