home loan finance blog
The number of loans taken out by those either wishing to advance on the property ladder or for re-mortgaging purposes has fallen, according to new research.
According to data released by the Council of Mortgage Lenders (CML), a total of 94,000 loans were approved for house purchase over the course of July, worth some 14.8 billion pounds. Meanwhile, 92,000 loans for re-mortgaging purposes were granted at a total of 11.5 billion pounds.
Despite this fall, lending which is not accounted for by either house purchasing or re-mortgaging was revealed to stand at a record amount. At 7.8 billion pounds, such borrowing – which was reported to mainly consist of buy-to-let or further advances – made up 23 per cent of total lending during the course of the month – the highest-ever proportion recorded.
However, the number of home loans issued to first-time buyers during the month was shown to have decreased by seven per cent to 32,400 – with the value of such borrowing falling by four percentage points. In addition, financial pressures on those making their initial steps on the property ladder was also shown to be increasing as the average first-time buyer income multiple stood at a record 3.39 in July – up from the 3.23 recorded during the same month in 2006. Meanwhile, those first-time buyers taking out a loan over the course of July were revealed to be putting 19.7 per cent of their annual income towards servicing mortgage interest. And with such expenses accounting for an ever larger proportion of their spending, this could well affect their ability to service other areas of their finances such as credit cards and personal loans.
Commenting on the study, Michael Coogan, director general for the CML, warned that the financial pressures Britons are currently facing, for instance their ability to make mortgage repayments, pay off credit card and utility bills and service unsecured loan debts, could be set to continue. He said: A slight fall in lending between June and July has emerged for the third year in a row, so of course we cannot read too much into a single months figures. But the long-anticipated slowdown in the housing and mortgage markets may now be beginning to materialise.
Last weeks MPC decision to hold rates was exactly as expected. Both market conditions and sentiment are coming off the boil and affordability is ever more stretched, but consumers should not expect any immediate easing in the financial pressures they face.
In related news, consumers were recently revealed in an Alliance & Leicester study to be becoming increasingly worried about managing their money as some 3.4 million adults state that they get anxious about their finances on a daily basis. According to the research, half of consumers are troubled about their financial state during the approach to the festive period, as Andy Bayes, head of current accounts, suggested that creating a budget and switching to more competitive products could allow them to alleviate such concerns. Findings from the financial services firm also revealed that two million Britons adopt the burying their heads in the sand approach when getting anxious about their finances and consequently get into further difficulties by racking up debts on credit cards and personal loans.