Mortgage Rates Slow Down in UK Housing Market in October 2016

UK housing market showed rather a slower tendency towards the number of mortgages sought out by home movers in October 2016. It’s 20% less than that of in October 2015, as explained by the Council of Mortgage Lenders.

Tax changes has led to the fall down of the buyer market whereas the remortgage activity is strengthened by lending market and it is showing huge growth rate as it has achieved its 8-year high figures (since January 2009) in October 2016.

After the Brexit vote, home owners have been dealing with Back of England’s rate cut to 0.25 percent. Home owners’ confidence has been shaken by the EU referendum in June 2016.

Borrowers have to pay a certain amount from their household income to cater the service repayments. According to Council of Mortgage Lenders, this amount has fallen at 17.6 percent for both first-time buyers and home movers.

According to Paul Smee, Director General of Council of Mortgage Lenders, the buy-to-let lending slowed as borrowers are getting the benefits of mortgage re-pricing due to the recent tax cut changes, thus making the remortgage market strong.

According to Royal Institution of Chartered Surveyors, in October 2016, approximately 28,900 loan payments were issues to home movers, which is 20 percent less than that of last year and 8 percent less than that of in September 2016. £5.9 billion were borrowed by home movers, which is 18 percent less than that of a year ago and 9 percent less than that of in September 2016.

In other words, number of buyers increased in October 2016 where as the number of properties available actually fell down.

Remortgage activity showed 11 percent increment in September 2016, which is around £6.1 billion. Number of loans also showed growth as 34,700 loans were granted in October 2016 (up by 10 percent from September 2016 and up by 5 percent from October 2015.

Bank of England is currently monitoring the buy-to-let market and its statistical figures claim that it’s slowed down due to the 3 percent stamp duty surcharge on second properties. This surcharge was introduced in April 2016.

Although lending showed growth by 7 percent on monthly basis making it £3 billion yet it’s still 21 percent lower when it comes to annual lending growth. Buyers were seemed to be more interested in remortgages than that of house purchases. They are getting benefits of low rates in order to get relatively more secured and less monthly repayments in the coming years.

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