1 National Mortgage Index Under embargo until 00:01 hrs on 28.06.17 June 2017 Reporting on May 2017 data National Mortgage Index Brian Murphy Head of Lending Mortgage Advice Bureau Market Steady in May ahead of Election With the snap Election called in April, May was always going to be a litmus test of the UK property market in terms of how consumers would react to yet more political upheaval. However, the positive news, as can now be evidenced by the data from last month, is that most factors remained steady with very little movement in terms of key indicators, meaning that the market was positively underpinned by the time the Election took place on June 8th. Looking at data from last month, we can observe the following: 1.1% increase in average purchase price, and correspondingly a 1.1% increase in typical purchase loan size Minimal change in the average size of remortgage month on month, highlighted by a 0.2% decrease Average purchase prices for First Time Buyers remained broadly unchanged on previous month with a 2.95% increase Other key factors, such as the latest data from HMRC suggesting that property transactions for May were up both month on month and year on year, all provide the new Housing and Planning Minister Alok Sharma with a solid foundation to work from, but with the formation of a confidence and supply arrangement with the DUP, when it comes to solving the housing crisis clearly what s needed now is a true cross party committee approach. The only way that any pragmatic solutions can be found is by taking the politics out of the situation and working with the industry to understand what is actually achievable and practical, bearing in mind that the companies who will be delivering upon these promises are in many cases, privately owned or listed and therefore, don t have registered charity on their letterhead. But until such times as housing is seen as a Cabinet post, it will be nigh on impossible for any Housing Minister to really make a difference in terms of the major factors at play, namely lettings legislation in the private sector, social housing provision, new build volumes and the plethora of planning issues which prevent otherwise straightforward housing solutions being implemented. What isn t within any Government s control is how lenders approach legislation, and we ve already seen how fundamental changes to the way that residential mortgages are policed, introduced in 2014 as a result of MMR and then latterly, changes to Buy To Let borrowing which have been introduced as a result of the PRA, have had an inevitable impact on the UK housing market, because at a basic level, if it s more difficult to get a mortgage, less people will be able to get on or move up the housing ladder, regardless of how many new properties are built. And regardless of what any Government does, the Bank of England and financial services industry are, to a point, out of their control. We ve already seen what the Conservatives achieved by introducing tougher taxes on landlords, and increased levels of SDLT on second homes and Buy to Let properties, and we ve only just begun to see the ripple effects this is causing both good and bad in terms of some landlords withdrawing from the market, a situation which is likely to increase once Buy-To-Let investors start to see the real impact on their personal tax bills. According to data released by the ONS this month, rents have increased on average across the country by 1.8%, which is an expected outcome of a lack of supply in many areas. However, First Time Buyers, who are seen as the lifeblood of the housing market, have largely benefitted due to fewer landlord buyers competing for the same properties as a result of the Government s intervention. Of course, we won t know until September what the full impact of the Election has been on the housing market, as only then will we have data on transactions which were started from June 9th onwards. However what we can see is that the market was robust in May, which hopefully will ensure that both transaction levels and values remain steady in the months to come.
2 ON Average purchase loan 174,852 in, 1.1% higher than in April 2017 ( 172,929) and slightly higher than in when the average loan was 171,531. < > ON Amount of purchase applicants who opted for fixed rate products In, 96% of borrowers fixed their mortgage, unchanged on April 17 and a slight increase on (94%). Typical LTVs Remain unchanged month on month at 70%, and also unchanged year on year from 70% in. Average applicant age 36 years old, unchanged month on month and down slightly from (37). 42 yrs Remortgage 45 yrs Buy-To-Let 31 yrs First Time Buyer ON Change in the average purchase price Up slightly in to 249,317 from 246,569 in April 17, a month on month increase of 1.1%. ON Change in average purchase salaries 36,447 in, a slight decrease on April 17 ( 37,401) of 2.55% and broadly similar to 36,826 in.
3 Remortgage ON Average remortgage loan 173,955 in, a decrease of 0.2% on April 17 ( 174,325) and a decrease on ( 177,147). < > ON Amount of remortgage applicants who opted for fixed rate products In, 94% of borrowers fixed their mortgage, unchanged month on month and up 4.5% on (90%). Typical LTVs Increased in to 54.3% from 53.7% in April 17, and decreased by 3.4% on (56.2%). Average applicant age 42 years in, unchanged month on month and also unchanged on (42). 45 yrs Buy-To-Let 36 yrs 31 yrs First Time Buyer ON Change in the average remortgage property value Down slightly to 320,574 in from 324,841 in April 17, and an increase of 1.5% on ( 315,878). ON Change in average remortgage salaries Slightly higher in ( 42,653) than in April 17 ( 42,358) and 0.3% higher than in ( 42,541).
4 Buy-To-Let ON Average BTL purchase loan 129,815 in, 1.8% higher than in April 17 ( 127,390) and 8.3% lower than in ( 141,659). < > ON Amount of BTL purchase applicants who opted for fixed rate products In, 95% of BTL borrowers fixed their mortgage, unchanged on April 17, compared with 86% of BTL borrowers who fixed their mortgage in. Typical LTVs In, the average BTL purchase LTV was 68%, up marginally on April 17 (66.7%) and slightly lower than (68.3%). Average applicant age 45 in, unchanged month on month and one year younger than (46). 42 yrs Remortgage 36 yrs 31 yrs First Time Buyer ON Change in average BTL purchase price Down to 190,950 in from 191,143 in April 17, and reduced year on year from 207,548, a decrease of 7.9%. ON Change in average BTL purchase salaries Down in to 40,913 from 41,880 in April 17, and increased on ( 39,900).
5 First Time Buyers ON Average FTB purchase loan Up 0.3% in to 155,435 from 154,930 in April 17. < > 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 (98%). Typical LTVs Remained unchanged month on month in at 74%. Average applicant age 31 in, unchanged on April 17. 45 yrs Buy-To-Let 42 yrs Remortgage 36 yrs ON Change in the average FTB purchase price Up from 203,698 in April 17 to 209,893 in, an increase of 2.95%. ON Change in average FTB purchase salaries Up from 30,770 in April 17 to 30,949 in, an increase of 0.5%. NB: Figures are based on April 2017 and May 2017 data
6 Regional Loan Analysis Increase from previous month Decrease from previous month NORTH WEST Av. Loan 129,217 Av. Loan 128,007 Monthly Change 0.9% Av. Loan 126,949 Annual Change 1.8% WEST MIDLANDS Av. Loan 170,777 Av. Loan 170,026 Monthly Change 0.4% Av. Loan 162,974 Annual Change 4.8% WALES Av. Loan 125,113 Av. Loan 128,391 Monthly Change -2.6% Av. Loan 124,060 Annual Change 0.8% NORTH EAST Av. Loan 128,907 Av. Loan 124,860 Monthly Change 3.2% Av. Loan 117,168 Annual Change 10.0% SCOTLAND Av. Loan 146,941 Av. Loan 146,647 Monthly Change 0.2% Av. Loan 140,363 Annual Change 4.7% YORKS & HUMBER Av. Loan 144,552 Av. Loan 143,684 Monthly Change 0.6% Av. Loan 138,087 Annual Change 4.7% EAST MIDLANDS Av. Loan 140,061 Av. Loan 140,067 Monthly Change -0.0% Av. Loan 130,889 Annual Change 7.0% EAST of ENGLAND Av. Loan 157,852 Av. Loan 152,591 Monthly Change 3.45% Av. Loan 141,791 Annual Change 11.3% SOUTH WEST Av. Loan 166,108 Av. Loan 164,349 Monthly Change 1.1% Av. Loan 165,860 Annual Change 0.1% SOUTH EAST Av. Loan 227,438 Av. Loan 224,319 Monthly Change 1.4% Av. Loan 223,312 Annual Change 1.8% GTR LONDON Av. Loan 364,969 Av. Loan 367,485 Monthly Change -0.68% Av. Loan 336,930 Annual Change 8.3%
7 Regional Market Commentary Mortgage Advice Bureau advisers from around the UK give their views... Rachel Geddes - London We observed quite a bit of wait and see in May with regards clients holding off on making decisions until after the Election, both in terms of purchases and remortgages, but that s probably more prevalent locally due to the fact that many people who live in London work in Finance and other related sectors that are directly influenced by political and economic factors. As a result, property values cooled slightly, but we would suggest that this was really just vendors settling for realistic offers rather than holding out for higher price, and this has been the case in the London market for a few months now, so isn t particularly unusual. That all said, First Time Buyers in particular were very busy in May, which could be as a result of pricing becoming more realistic, but also that it s currently cheaper to buy than rent in London, particularly with the new competitively priced mortgage deals which are available. We also saw that most of the First Time Buyers who transacted with us were in some way assisted by the Bank of Mum and Dad a trend that we don t see changing any time soon Elsewhere, the new build sector was still busy in May with many units coming to fruition in time for Summer completions, which is in line with current market expectations for the next few months with many iconic developments around the City nearing conclusion. Richard Hullin - Swansea Although the Election was very much in the news in May, it didn t impact us at all, as we were really busy all month. Most of our clients were those looking to purchase, with home movers active and a lot of First Time Buyers in the market too. That s not particularly surprising as we ve seen a plateau with regards the amount of Buy-To-Let investors locally, so there is more entry level property available for those starting out. Remortgages were also popular last month, with many of our clients keen to see what savings could be achieved by switching. With lenders continually releasing competitive deals this is likely to continue for some time. House prices are still holding up well in Swansea and the surrounding areas, mainly because there still aren t enough properties on the market to fulfil current demand. Overall, house prices were steady last month in Swansea and the surrounding areas, with most properties holding at around their current values and some being sold for over the asking price, which is consistent with the ongoing supply and demand imbalance locally. Lisa Berrido - Manchester We saw no signs at all in May which pointed to the upcoming Election affecting clients decision making with regards their mortgage or house move. As a consequence, the majority of our clients in May were seeking mortgages to fund a home purchase, either as First Time Buyers or home movers. Both groups were busy and active, but in particular, we observed an increase in the level of First Time Buyers who were transacting, probably because they weren t competing with Buy-To-Let landlords for the same sorts of properties. Of course, this is a positive sign, as First Time Buyers tend to underpin the rest of the market somewhat, so this is a trend we hope to see continue, and the entry level end of the market locally in particular is very busy. In terms of remortgages, we continued to see clients starting to explore how much they could save on their monthly payments or reduce off the total term of their mortgage, having seen the competitive rates being released from lenders, and being tempted to move from their current Standard Variable Rate (SVR) onto one of the new ultra-low rates. Overall, house prices were steady last month in Manchester and the surrounding areas, with most properties holding their current values and some being sold for over the asking price, which is consistent with the ongoing supply and demand imbalance locally. Aaron Frizzel - Edinburgh It was very much a case of business as usual in May north of the Border; the majority of our clients were seeking mortgages for purchase, with those moving home busy and First Time Buyers particularly active. Interestingly, we ve seen stabilisation of Buy-To-Let purchases month on month, so whilst numbers remain subdued, some landlords in the local area are still adding to their portfolio due to the strong rental returns available. May was also consistently busy assisting clients with their remortgages, and we observed that the ultra-competitive 2 year fixed rates available remain the most popular choice. In terms of property values in the local area, consistent with the market maintaining momentum, we ve see prices consolidate with marginal changes, a pattern we would expect to continue for the foreseeable future.
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 950 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 950 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.