Monthly Financial Services Insight from Gavin Hilton

Last week the Council of mortgage lenders released the mortgage lending figures for August, which highlighted an increase of 14% on July. This would indicate a recovery perhaps, in people’s thoughts in the aftermath of the Brexit vote. Gross lending was £12.2bn, which also highlights an increase of 11% on the same month last year. 

Breaking this down further;

* £5.1bn was borrowed by first time property buyers; up 13% on July and 24% on August last year. 

* Home mover borrowing was at £7.1bn; up 14% on July and 2% on August last year.

* Remortgage borrowing was up 4% on July and 40% on August 2015.

I think the bouncing back from the dip in July, reflects the resilience in first time buyers’ attitudes and interest rates remaining at historic low levels is supporting this. 

One area of lending that is down year on year is landlord borrowing, the decline in this area began 5 months ago when the stamp duty surcharge kicked in. Buy to Let mortgage lending is also hot on the regulators’ radar.

The Prudential Regulation Authority have previously announced tough new regulations that will see a stress test for Buy to Let lending becoming compulsory across the market. Previously it was announced that 125% rental coverage, with mortgage interest calculated at 5.5% becoming law, however it has been mentioned recently that the 125% could in fact become 145%. A number of lenders are already adopting this level of stress testing. 

So, I think the message here would be that anyone considering a Buy to Let purchase, retaining a current residence as a Buy to Let or indeed anyone with an existing portfolio should seriously consider either buying now ahead of these changes becoming law or should seriously consider reviewing their portfolio positions, with a view to capital raising now and adding to portfolio’s now before these criteria tighten. 

I hope you have found that bit of insight useful, if you have any questions at all, you know where I am. 

Best Regards,

Gavin Hilton BaHons, CeMAP, CeRGI, CeRER
Financial Adviser  Mob: 07498753422 Tel:  02084296304 Email: gavin.hilton@piafp.co.uk www.piafp.co.uk