Mortgage lending soared to a record high in July, despite a squeeze in the sub-prime end of the market. The Council of Mortgage Lenders said yesterday that borrowers were rushing to remortgage in a climate of rising interest rates.
However, at least seven British sub-prime lenders have raised their interest rates or withdrawn products, according to Money Marketing magazine. Victoria Mortgages , GMAC-RFC, Unity Homeloans, Infinity Mortgages, Mortgages plc, Preferred and DB Mortgages (a subsidiary of Deutsche Bank) are affected. The "sub-prime" sector in the UK accounts for about 10 per cent of home loans; its American counterpart has become infamously associated with the global financial crisis.
In Britain's mainstream home loans market, things seem much rosier, for now at least. The Council of Mortgage Lenders announced yesterday that gross mortgage lending reached a new record for the month of July, at £34.4bn, down by 1 per cent on June, but 13 per cent higher than in the same month last year.
A spokesman for the council stated that "mortgage lending remains robust despite the five interest rate rises since last August. Lending is being fuelled by a large number of people remortgaging to better deals in case rates go any higher. As we move into the autumn the cumulative effects of these rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses". Remortgaging in the "specialist sector", typically for buy-to-let properties, has seen especially strong growth.
The picture was confirmed in data from the British Bankers' Association, which said mortgage lending rose £5.7bn last month, up from £5.4bn in June and above trend. "July's strong rise was surprising, given the expected cumulative impact of higher interest rates", said David Dooks, BBA director of statistics. "This resilience shows the popularity of home ownership and also reflects more remortgaging activity". Underlying credit card lending fell for the fifth month running, down £73m.
Meanwhile, the Building Societies Association suggested that mortgage lending growth for traditional residential purposes (as opposed to buy-to-let and other purchases) was easing. The BSA said seasonally adjusted mortgage approvals - also a more forward-looking indicator of housing demand - amounted to £3.6bn in July, down from £4.9bn in the same month last year. "This is a tale of the five interest rate rises in the last year feeding through to the market," said Adrian Coles, BSA director general. "The strong start to the year has fallen away."
0 comments:
Post a Comment