Buy to Let
Gross mortgage lending highest since Q3 2008 – BoE
Gross mortgage advances reached
The mortgage lending data released jointly by the Bank of England and the Financial Conduct Authority revealed this was an increase of 31% year-on-year.
The overall value of residential loans outstanding was £1,238bn in the final quarter of last year which represented an increase of 0.4% compared to Q3 2013.
The value of loans advanced to first-time buyers increased by £3.1bn last year to £10.6bn – the highest quarterly amount since quarter three 2007.
Buy-to-let lending followed the same upward trajectory with a 53% increase in the value of new lending year-on-year.
The value of new loans advanced in quarter four 2013 reached £6.6bn compared to £4.3bn advanced in Q4 2012.
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Jonathan Harris, director of mortgage broker Anderson Harris, said: “Buy-to-let lending also continued to pick up as investors shunned poor rates on savings accounts, choosing instead to invest their money in property.”
Advances over 90% loan-to-value accounted for 2.1% of all gross advances last year – little changed from Q4 2012.
Fixed rates continued to be the preferred product chosen by mortgagors.
The proportion of gross advances at fixed rates increased for the fifth quarter in a row to 80.3%.
The overall average interest rate on gross advances continued its decline since Q3 2012 decreasing by 7bps in Q4 2013 to 3.25%.
This is the lowest interest rate recorded since the series began in 2007.
It was driven by the decreases in fixed rate loan average rates by 10bps to 3.30% and variable rate loan average rates by 8bps to 2.99%.
Harris said: “An increasing number of borrowers are worried about the threat of an interest rate rise with more than 80% of mortgages taken out in Q4 2013 on a fixed rate basis.
“However another reason for the migration towards fixed rates is the fact that they are so cheap: they may have edged up slightly in the past few weeks but in Q4 2013 the average fixed rate fell to 3.25%.”
Meanwhile the number of new arrears cases in Q4 2013 fell by 2.9% compared to the previous quarter to 29,208.
This was the lowest quarterly number of new cases in arrears since the series began in 2007.