Tag Archives: Mortgage lending

Housing market shows rebalancing across regions


According to the latest UK Finance report, gross mortgage lending is estimated at £24.2 billion, with the market rebalancing in the North of the UK.

Highlights from the report included:

  • Housing market continues to grow modestly, dominated by first-time buyers
  • There is evidence of rebalancing across regions
  • Of the £24.2 billion in estimated mortgage lending, £13.2 billion was lent by High Street banks 


Despite high levels of employment, with yet another 1% decrease in unemployment (now 4.3%); economic growth is slowing, with wage growth at 2.1%.

A lack of wage growth, combined with inflation running at 2.9% in August, has resulted in workers reducing savings and being more conservative with their spending. It is predicted that this will rise to 3% in October and then fall slowly after that.

As inflation rises, the Bank of England Monetary Policy Committee (MPC) may see fit to introduce modest monetary tightening in the form of a 0.25% base rate change. With already tightening budgets, this may propel home owners to secure the current and more favourable mortgage deals through their mortgage consultant.


A slowdown in the economy can also dampen the housing market. However, 12-month averages remain in line with predictions, showing activity that resembles 2015 figures, according to UK Finance. Despite economic challenges, lending sits at £24.2 billion in August.

First-time buyer activity continues to grow, owing to the various Government schemes and the appetite for new-build properties. This is, however, not the case for home movers, whose lack of help from schemes and shortage of available property discourages them from selling.

Buy-to-let still suffers from changes to tax and remains flat, however, remortgage activity among home owners is still increasing, as rates remain competitive.

According to UK Finance, there is also evidence to show that there is a shift away from London, with the North of England, Wales and Scotland showing signs of stronger housing activity. This may be due to affordability challenges, making outer London areas more appealing. UK Finance also identified that of the £24.2 billion in estimated lending, £13.2 billion was lent by High Street Banks.


The housing market currently has a number of Government schemes aimed at stimulating certain areas of the market, all of which will end at some point and new ones launched. According to the UK Finance report, the Bank’s MPC minutes showed the committee voted unanimously to close the drawdown period for the Term Funding Scheme on 28 February 2018, as planned when the scheme was originally introduced back in August .”

In addition, the report also confirmed that buy-to-let landlords with a portfolio will be subject to stricter rules when they apply for a new buy-to-let mortgage, where underwriters (those who make the final decision on a mortgage application) will look at the risk of funding them. Although not set in stone, they will look at a landlord’s experience and how profitable they are with their existing properties. The report confirmed the date of 30th September 2017 for implementation.

Henry Knight, Managing Director, Springtide Capital commented: “As wallets are squeezed with inflation, low wage growth and the rumour of an interest rate rise, it’s a good time to review your mortgage with a consultant. The mortgage market is extremely competitive at present.

“Notably, the gross mortgage lending figures show that only £13.2 billion was lent by High Street banks, perhaps demonstrating what we see at Springtide Capital, that specialist lenders are sometimes better placed to fund some clients and their individual circumstances.”

For more information, please visit www.springtidecapital.com or call 020 3040 4400.

First-time buyer demographics have changed


The latest report from the English Housing Survey (EHS), shows a shift in first-time buyer demographics: revealing a distinct change in the age, deposit size and source of deposit finance compared to a decade ago.

Highlights of the survey include:

  • One in five (21%) first-time buyers were aged between 35 and 44 years in 2015-16, up from 16% in 2005-06
  • In 2015-16, three-quarters (74%) of first-time buyers were couple households, a marked change from 2005-06 (66%)
  • Over the same period, the proportion of first-time buyer households with dependent children increased from 23% to 37%
  • Two-thirds of first-time buyers pay a deposit up to 20% of the purchase price, 29% getting help from their family (up from 22% ten years ago)

Source: English Housing Survey (2015-16) 

Research paints a different picture of first-time buyers

The EHS research paints a very different picture of the journey that some first-time buyers may go on when compared to ten or twenty years ago. By understanding these changes and the attributed factors, we can see why the knowledge, experience and guidance of mortgage consultants have become more valuable than ever before.

In 1995, around 20% of first-time buyers were aged 16 to 24. They may have raised funds for their deposit on their own, have submitted a single mortgage application, and they may not have had children at the time of purchasing their first home.

Fast forward to the findings from 2016 EHS, and you’ll find that there are fewer youngsters able to afford a house in the 16 to 24 age bracket. First-time buyers could be slipping into the 25+ bracket as it takes longer to save the level of deposit now required for their first home – house price growth has been outpacing income growth for more than twenty years. As a 25+ mortgage applicant, they may also be a couple and have children.

The hard facts

According to the EHS, Londoners are choosing to raise a deposit of up to £94,088 (mean value) to secure a favourable mortgage rate on their first home, with 29% turning to family to help raise funds ­– a 7% increase in a decade.

While working hard, saving even harder and raiding the bank of Mum and Dad, 74% of first-time buyers will have teamed up with another person and 37% will have children before they buy their first home ­­­– 8% and 14% higher respectively since 2006.

The EHS also found that those purchasing their first property were in the two highest income bands, now accounting for nearly two-thirds (66%) of first-time buyers, compared with 58% ten years ago.

How does this affect a mortgage application?

A mortgage consultant needs to take all of the changing demographics and factors into account, and Springtide Capital is no different.

A joint application, an older applicant, a larger mortgage and having children impacts affordability. A joint application, for instance, increases the amount of evidence of income required, but equally, it increases the chances of funding with two incomes instead of one. The age of the applicant and the period in which they require the mortgage is reflected in the affordability of monthly payments, as is the age restrictions and period of mortgage allowed by lenders.

The affordability of funding for a house (prices having outpaced income for many years) and the costs of running a household with children also needs to be considered. All this has to be reviewed by an experienced mortgage consultant, who not only works out the affordability but also the correct lender to suit an individual’s needs – it’s become more of a balancing act.

Henry Knight, Managing Director, Springtide Capital commented: “First-time buyers are an essential cog in the housing market machine: without them, the market slows – they allow existing property owners to release equity and re-invest in the housing market. At Springtide Capital, we pride ourselves on understanding a changing market and identifying which product and lender are suitable for each applicant.”

Two months to buy-to-let regulatory deadline


Landlords brace themselves for more regulation and mortgage brokers expect an influx of new buy-to-let mortgage applications before the deadline.

Some time ago, the Prudential Regulation Authority (PRA), part of the Bank of England, announced that it will start to enforce stricter rules for lenders who are assessing a new buy-to-let mortgage for a landlord who already has four of more properties. The PRA gave a deadline of 30th September 2017, which is now approaching.

An ideal time to review your buy-to-let mortgages

The CML reported that there has been a slight increase in loans taken out on fixed terms of 5 years or longer, which are exempt from PRA stress testing requirements coupled with more bespoke underwriting criteria based on a variety of factors which may include property characteristics, the landlord’s existing portfolio, and the landlord’s tax bracket, in addition to standard interest cover ratio thresholds. CML expect to see £35 billion in buy-to-let mortgages in 2017 and £33 billion in 2018.

Henry Knight, Managing Director, Springtide Capital said: “It’s an ideal time to review the mortgage terms on a buy-to-let portfolio and secure a rate, where circumstances fit, that enables the landlord to maximise security whilst not compromising too much on the yield. As one of London’s leading buy-to-let specialists, we have the knowledge, expertise and lender relationships to help landlords through this regulatory change.”

The facts

The PRA’s supervisory statement outlines minimum expectations that firms should meet in underwriting buy-to-let mortgages, specifically:


  • Affordability assessments should take into account: borrower’s costs including tax liabilities verified personal income (where used by the lender) and possible future interest rate increases. When setting the expectations for future interest rate increases, the PRA reviewed the prevailing standards in the industry and considered the impact of changes in interest rates, and calibrated the stressed rate accordingly.
  • Lending to portfolio landlords (defined by the PRA as being those with four or more mortgaged buy-to-let properties) should be assessed using a specialist underwriting process.
  • The PRA wishes to clarify that the provision in Capital Requirements Regulation (CRR) which reduces the capital requirements on loans to small and medium-sized enterprises by around 25% should not be applied where the purpose of the borrowing is to support buy-to-let business.
  • An implementation timeline of 1 January 2017 for the more straightforward changes, and 30 September 2017 for the remainder.
  • Allowing firms to assume reasonable rental increases when assessing affordability in the context of possible future mortgage interest rate increases.
  • Excluding those re-mortgaging (and not increasing borrowing) from the supervisory statement, in a similar way to residential lending.
  • Reflecting the change to mortgage interest tax relief announced by HM Government in 2015, which has already led to several firms increasing their interest cover ratio affordability thresholds. The PRA has reaffirmed its expectation that firms should also take these new costs into account when assessing affordability.

A buy-to-let market update

According to the Council of Mortgage Lenders (CML), the buy-to-let market had a weak start in 2017, contributing to an overall fall in lending of this type in the last 12 months. Although competitive mortgage rates are available, the tax and prudential measures have placed considerable pressure on the market.

CML added: “From April 2017, landlords who are higher rate taxpayers will see a progressive reduction in the tax deduction they can claim from mortgage interest each year, the first stage of a four-year transition. We have not yet seen any sudden contraction in lending as a consequence, but it will make landlords more cautious and is likely to restrict their ability to re-leverage their portfolios. Signs of this have been evident for some months, with fewer landlords releasing equity when they refinance.

“Since January, the Prudential Regulation Authority (PRA) has required lenders to stress test new lending by either 5.5%, or 2% above the pay rate, whichever is higher. Lenders had already prepared for this, and in some cases applied the stress tests in advance of the deadline. This makes it more difficult to sustain a highly-leveraged buy-to-let business model, with negative repercussions in regional markets with low rental yields such as London.”

Housing market reaches a plateau


According to the Council of Mortgage Lender’s (CML’s) latest market commentary report, gross lending increased to £22.1 billion in June, up 9% on May and 3% on June last year.

Other report highlights included:

  • Activity and lending flat since the start of the year
  • Reduced consumer expenditure, which may become more acute against a challenging economic outlook
  • Home-owner remortgage activity and first-time buyers supporting lending


CML’s report states that the economy has slowed in the first half of 2017, with growth expected to track at half the rate of recent quarters. In the first three months of 2017 growth was 0.2%, and the three months to June is expected to be 0.3%.

Unemployment continues to remain low at 4.5%. Due to weak growth in wages at 1.8%, workers spending power is being eroded by inflation, with the Consumer Price Index at 2.6% in June.

The CML report continued to add that “A number of Bank of England monetary policy committee (MPC) members have recently voiced their opinions on raising interest rates. Despite this, a rate increase when they next meet in August seems unlikely as inflation is currently in line with the MPC’s expectations as set out in May’s Inflation Report.”


The economic backdrop has meant that the housing market has reached a plateau, with activity and lending flat since the start of the year.

Property transactions averaged 100,000 during recent months, however the recent weakening in house purchase approvals – a leading indicator of activity – could mean fewer transactions in the months ahead.

Henry Knight, Managing Director, Springtide Capital added: “The mortgage market has had a variable 2017 so far. Compared to late 2015 and early 2016 when all areas of transactions were growing, it’s clear that first-time buyers continue to drive house purchase activity. This is a trend that is likely to continue over the coming months and is the first time since 1996 that first-time buyers have exceeded movers. Although the under­lying market is healthy, uncertain economic and political conditions have resulted in an increasing number of borrowers tightening their budgets. Generally speaking, the latest data suggesting a lacklustre housing market and predictions that the Bank base rate could rise from its historic low of 0.25 per cent, gives us a good indication of how future transactions may develop in the second half of 2017.”

If you’d like advice on obtaining a mortgage, simply call Springtide Capital on 020 3040 4400 to book an appointment with an adviser.

Housing transactions propped up by first-time buyers

According to the Council of Mortgage Lender’s (CML’s) latest market commentary report, gross lending hit £18.4 billion in April.

Other report highlights included:

  • Transactions continue to be driven by remortgage activity and first-time buyers
  • Buy-to-let and home mover numbers remain subdued
  • Number of first-time buyers over the last year overtakes the number of home movers for the first time since 1996


CML’s report states that the economy has grown slower than expected at 0.3% in the first three months of 2017.

Unemployment remains low at 4.6%, however, the Bank of England’s predictions of a rise in inflation has been realised, now sitting at 2.7%. It’s expected that this will have an impact on consumer spending, with March data showing that wages are falling.

The CML report continued to add that “given that wage growth remains weak, even in the face of rising inflation, the Bank of England’s monetary policy committee (MPC) continued to signal that it would be willing to tolerate a degree of above-target inflation.”


The housing market continues to be subdued, with little change in the last six months and down slightly compared to a year ago.

There have been 100,000 housing transactions on average each month, which has resulted in an average of 67,500 house purchase approvals for the past six months. The Monetary Policy Committee (MPC) has left their expectations for house approvals at a figure of 71,000 per month.

Henry Knight, Managing Director, Springtide Capital added: “Whilst 2015 and 2016 showed steady growth across all components of transactions, 2017 sees a heavy reliance on the growing purchase activity from first-time buyers. It’s fair to say that the buy-to-let stamp duty changes have reshaped the housing market, perhaps giving first-time buyers the opportunity to snap up properties, which previously would have been purchased for investment purposes. However, with the end to the Help-to-Buy mortgage guarantee scheme in 2016, continuing affordability issues and a requirement for large deposits, there is no sign of the first-time buyer market getting any easier.”

If you’d like advice on obtaining a mortgage, simply call Springtide Capital on 020 3040 4400 to book an appointment with an adviser.

Mid-priced boroughs in London drive up house prices


Image source: Rightmove

According to property search portal Rightmove, the average price of a newly marketed property in Greater London has jumped by 1.4% (+£8,656) this month.

The reason? The outer London mid-priced boroughs have helped to drive the property price average to £649,772. The Rightmove report contrasts this with the smaller increase of 0.4% (+£2,941) in Inner London.

As people look for more space and value for money further afield, it pushes up demand in those areas, which in turn pushes up prices.

Boroughs seeing the biggest price hikes

The boroughs seeing the largest increases this month are dominated by those in the mid-price range broadly between £600,000 and £700,000 and sitting either side of the new overall London average of £649,772. The five whose monthly rises stand out are all in Outer London: Ealing (+6.3%) Harrow (+4.8%), Kingston-upon-Thames (+3.9%), Barnet (+3.8%), and Brent (+3.7%).

Miles Shipside, Rightmove Director and housing market analyst comments: “While these prices are beyond the reach of many, these boroughs with average newly-marketed asking prices between £578,000 and £723,000 are in the mid-range for London. With growing needs for space, many Londoners are faced with trying to afford these prices when trading up, and get more for their money further out of the capital. This trend, rather than a recovery in all sectors of the London market, has helped to push the price of property coming to the market to record highs.”

Springtide Capital’s view

Henry Knight, Managing Director, Springtide Capital, commented: “As buyers look for more space to grow and more affordable prices, the appeal of moving to outer London increases. However, these commuter-route hotspots are bound to increase in price as the demand goes up, it’s becoming harder for people to find affordable property even in outer London.”

Housing transactions above the 100k mark for second month


According to the latest Council of Mortgage Lender’s (CML) report, momentum continues to build on housing activity levels, as transactions have now been above the 100,000 mark for the second month in a row.

Other report highlights included:

  • Gross mortgage lending for February is £18.2 billion.
  • Lending is increasingly being driven by remortgage activity
  • The number of first-time buyers rose to over 340,000 in the 12 months to January, unmatched over any 12-month period since early 2008


Economic growth in the last quarter of 2016 was bumped up slightly to 0.7% and the economy unemployment rate fell to its lowest rate since early 2005.

However, average weekly earnings growth remains weak, with growth in wages falling to 2.2% in January.

Consumer price inflation reached 2.3% in February, exceeding the Bank’s target for the first time in over three years.

The CML reported: “With wage growth likely to remain weak, real wages will stagnate for much of this year, bearing down on spending. An early sign of this is that retail sales have now contracted for the third month in a row.

“The Bank expects inflation to reach 2.7% by 2018, but signalled it is willing to look past this, as it believes raising interest rates to counter inflation would come at the expense of higher unemployment and weaker income growth.”


The market is getting back to the levels seen at the start of 2016, with house purchase approvals reaching 70,000 in January. This recent acceleration in approvals has seen transactions topping the 100,000 mark for the second month in a row.

Housing transactions are predominantly led by first-time buyers, with home-movers and buy-to-let house purchases both down annually.

CML reported: “Our estimate of lending in February comes in at £21.5 billion, on a seasonally adjusted basis, which marks a second breakout from the narrow tramlines it has been on for the past nine months. On an unadjusted basis, lending was £18.2 billion.”


Competition between lenders continues to keep rates low, with an average of 1.42% at 75% loan-to-value. This is bolstering a recovery in remortgage activity, with growth at 20%, year-on-year.

Government housing schemes have predominantly been aimed at first-time buyers, which has led to momentum building slowly. In the 12 months to January, there were 340,200 first-time buyers, the highest level of any 12-month period since early 2008.

However, the home-mover market is still subdued at around 360,000 on a 12-month rolling basis.

Finally, buy-to-let house purchases remain sharply down according to CML, stating that their forecast was an average of just over 7,000 house purchases a month, in 2017 – the year started with just 5,900.

Henry Knight, Managing Director, Springtide Capital commented: “We anticipated the downturn in buy-to-let purchases, with the new stamp duty dampening the attractiveness of becoming a landlord. However, there will always be a place for properties to let, whether it’s due to poor credit stopping a person from purchasing a house, work re-location, availability or affordability. It’s positive to see that housing transactions are increasing; however, the imbalance of supply and demand remains.”

For more information and advice on buy-to-let mortgages, please call 020 3040 4400 or visit our website.

Gross mortgage lending continues to rise, hitting £18.9 billion in January


According to the latest Council of Mortgage Lenders’ (CML) report, gross mortgage lending for January is estimated at £18.9 billion, up 2% compared to a year ago.

Other highlights included:

  • First-time buyer numbers continue to recover in 2016, but home mover numbers remain weak
  • The Housing White Paper was recently published but is unlikely to have an impact on the housing market this year


Driven predominantly by consumer spending, the economy grew 1.8% in 2016, prompting the Bank of England’s Monetary Policy Committee (MPC) to revise up growth for 2017 to just above that of 2016, at 2.0%, within the February Inflation Report.

CML stated that: “…inflation poses a risk to consumer spending as it continues to rise this year and is expected to peak at 2.8% by around this time next year. The latest figures show inflation reached 1.8% in January and there are already signs that it is putting pressure on consumer spending, as retail sales in January contracted for the first time in over three years.”

The economy is still creating jobs, with the employment rate of people aged from 16 to 64 who were in work at 74.6%, the highest since comparable records began in 1971.


House purchase approvals seem to be increasing, having reached 68,000 in December 2016, a marked increase on December 2015, which saw a low of 61,000. Due to these promising figures, the MPC has revised up its forecast to 71,000 per month.

CML added that: “We don’t have a breakdown of lending yet for January, but given recent trends, it looks likely to show that first-time buyers and remortgage activity continue to be the drivers of lending.”

“CML regional data shows in some areas, such as greater London, the number of home movers fell to their lowest levels for 25 years, highlighting the acuteness of this issue. The imbalance is likely to continue underpinning house price values.”


The Housing White Paper was published earlier this month and announced that a lot of small adjustments were needed to fix the chronic housing shortage. The impact of which, is not expected to be seen until 2018 and beyond.

Landlords will be subject to new tax relief changes for buy-to-let properties in two months, as part of a four-year transition.

Henry Knight, Managing Director, Springtide Capital commented: “We do not expect a surge of activity prior to this change, however, many landlords are already planning ahead in order to reduce the impact. I would encourage anyone who requires a mortgage to invest in a buy-to-let property to contact a member of the Springtide Capital team on 020 3040 4400.”


Gross mortgage lending reaches £20.4 billion in December, up 4% year-on-year


According to the latest Council of Mortgage Lenders’ (CML) Market Commentary, gross lending for December was estimated at £20.4 billion.

In fact, lending during 2016 was up 12% year-on-year in comparison to 2015, finishing up at £246 billion in total.

Other report highlights included:

  • Marginally higher property transactions in 2016 at 1.23 million
  • Buy-to-let sector lending lower compared to a year ago
  • The Housing White Paper will deliver homes in 2018 onwards


The economy fared well in 2016, with 2.1% growth overall, supported by low unemployment at 4.8% and growth in weekly earnings at 2.8%.

Still below the Bank of England’s target of 2%, inflation reached a two-year high in December of 1.6%. However, the CML expects this to increase as food, energy and import prices rise. This forecasted increase is the reason for lower forecasted growth in 2017, as consumer spending decreases from pressure on earnings.


The UK mortgage market ended 2016 at a healthy £246 billion, despite the ups and downs during the year including an acceleration in buy-to-let transactions in March before the stamp duty change and the post-change slump in activity. Brexit also caused a summer slump in activity, with confidence then returning towards the end of the year as the Bank of England took action – a roller-coaster to say the least.

First-time buyer activity continued to increase during 2016, reaching 337,000 in the 12 months to November 2016, according to the CML report. There were 1.23 million property transactions in 2016, slightly higher than 2015.

The re-mortgage market gained pace in 2016, as competing lender rates and a low interest rate incentivised activity.

The market is still being held back by the lack of available and affordable property, an issue which the Housing White Paper is set to address. However, it is unlikely that this will come to fruition until 2018.

Henry Knight, Director, Springtide Capital commented: “2016 was not only an historical year but has shown how resilient we are as a country, with the Bank of England coming into action to allay fears and bolster the economy. All in all, 2016 was a good year for mortgage lending, despite the political and regulatory cards that were dealt. That said, the changes to stamp duty and buy-to-let taxation have had a particularly negative effect on the London market.”


If you would like to speak to a Springtide Capital Mortgage Consultant please call 020 3040 4400.


Source: https://www.cml.org.uk/news/news-and-views/market-commentary-january-2017/


Register and prepare for a government-backed starter home


As the Government gives the green light to construct thousands of new starter homes, many 23-40-year-olds will want to know how to register interest and how the scheme will work.

As an established mortgage broker, Springtide Capital has provided an overview of the new scheme and how to pre-register interest.

What is the new construction plan?

The housing minister, Gavin Barwell, confirmed on 3rd January 2017 that this year will see the first starter homes being built on brownfield sites across the country.

Created to address severe housing shortages in the UK, the new scheme will be for those aged 23-40 and will provide affordable housing at a minimum of 20% less than market value.

The Government has said: “The £1.2 billion Starter Home Land Fund was established in April 2016 to support the acquisition, remediation and de-risking of further suitable land for starter home developments. Some 71 sites across the country have already received investments, including land at: Plymouth, Bury, Basildon, Stockport, Bridgwater, Cinderford, Minehead, Bristol, Trafford, Isle of Wight, South Ribble and Swindon.”

Aimed at helping first-time buyers to get on the housing ladder, this scheme has attracted strong interest from both builders and local councils. The Starter Homes Land Fund has been created to prepare suitable land for building developments, helping to accelerate construction by 2020.

How to register your interest

Based on the new houses being built in 2018, you’ll have a least one year to save and plan your finances.

However, the new homes will be in demand, so it’s advisable to pre-register your interest with New-Homes.co.uk (set-up via the Home Builders Federation) in addition to speaking to several local estate agents to ensure you’re made aware when they become available.

Working with professionals

If you’re considering purchasing your first home, it’s advisable to enlist the help of an experienced mortgage broker.

They will help you to understand whether you can afford the bills, the mortgage required to purchase a property, explain the process and help you to plan financially.

When the time comes, the mortgage broker will match your circumstances to a suitable mortgage lender, complete affordability checks, explain what you’re agreeing to and complete the necessary paperwork with you.

You’ll also need a solicitor, which your estate agent or broker can recommend. Choose carefully, as a good solicitor and mortgage broker will be the key to a stress-free experience.

Budgeting for the move

  • You’ll need to calculate the bills you can expect to pay at the property including food, council tax, utilities and buildings insurance etc.
  • Creating a spreadsheet with all expected bills, current commitments, savings and projected earnings will make it easier for both you and your mortgage broker to understand affordability.
  • You’ll also need to save a deposit for your new home (usually 5%) and allow for stamp duty tax for the purchase of the new property.
  • Finally, consider the cost of the move itself, including solicitor’s fees, mortgage fees (including surveys and valuations carried out) and removal costs. Your mortgage broker will discuss what you need to save for and the fees that can be added to your mortgage.

For more information or to book an appointment with a mortgage broker call 020 3040 4400.



Source: https://www.gov.uk/government/news/green-light-for-construction-of-thousands-of-new-starter-homes