The Bank of England’s latest figures show that in the first half of 2016, £128.73bn was lent by UK banks to buy property. This is impressive when you consider only £106.7bn was lent in the first half of 2015.
Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by banks in new mortgages for house purchase – this is the highest it has been for two years. Looking locally, in Rotherham last quarter, £424.6m was loaned on S60 properties alone!
Even though the Bank won’t be releasing the Q3 figures until December 2016, the HMRC have published their own preliminary data to suggest Q3 will be even better – with a massive growth of buy-to-let landlords to the housing market in that time frame.
This is fascinating as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.
And it’s not just buy-to-let landlords that seem to be flourishing.
I am finding that first-time buyers are also a lot more confident too.
Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Couple this reality with a low interest rate environment and you have all the ingredients for a strengthening property market.
To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers. This is the highest proportion of that overall lending for over two years (at 21.99%).
When I looked at the data for Rotherham Metropolitan Borough Council area, the average price paid by first-time buyers (FTBs) was £108,494, which is a rise of 0.82% from last month and a rise of 1.38% to twelve months ago.
The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £113,614, a rise of 0.73% from last month and a rise of 1.22% to twelve months ago, whilst buyers with mortgages (but not FTBs), the average price paid by them was £127,326, a rise of 0.71% from last month and a rise of 1.29% to twelve months ago.
What surprised me with these figures was how close the property prices, values and percentages were to each other.
It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Rotherham and UK market.
And that is why, while there is definitely more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike), mortgage rates are so competitive that they are inducing people to commit to a home purchase.
It seems the great Brexit uncertainty was over hyped.
House price growth, as well as mortgage approvals, could pick up pace into 2017.
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