The Brexit vote does not appear to have put off borrowers, with mortgage lending in June at its highest level in the past eight years.
Gross mortgage lending hit £20.7 billion – the highest figure since 2008 and 16 percent higher than the previous month, according to figures from the Council of Mortgage Lenders.
Stats from Revenue and Customs showed that property transactions in June rose by 4.9 per cent. There were 94,550 residential property transactions with a value of £40,000 or more. However, this is still 10.2 per cent less than the same period last year.
Earlier in the year in March, property transactions jumped 75 per cent, with buyers rushing to complete before the new stamp duty rules were introduced. The levels then plummeted through April.
Although there are fewer transactions, the stats show momentum in the housing market which will be welcomed by experts. The industry will be eager to see whether the trend continues and the property market fully recovers after the unexpected Leave vote.
The Council of Mortgage Lenders has predicted that lending will be likely to fall over the next few months with people uncertain of how the Brexit vote will impact both the housing market and the economy in general. It is expected that growth in the property lending sector will be in remortgages rather than house purchases, with both buyers and sellers holding back to see what lies ahead.
Further stats released by residential analyst Hometrack for June suggest that house price growth is starting to plateau across the country’s top 20 major cities. Hometrack’s report shows that growth has stopped at 10.2 per cent on average which was the same level as May. Looking at individual cities, the fastest house price growth of 14.7 percent could be seen in Bristol (compared to 7.8% June 2015, year on year) where the average property was £253,440. Growth in London for the same period was 13.7 percent (compared to 8.2% June 2015, year on year) with an average price of £476,800. Other cities seeing positive growth include Manchester (average price £147,400), Liverpool (average price £112,200), Glasgow (average price £113,400) and Leeds (average price £151,800), where house prices tend to be more affordable and offer above average yields that are attractive to would-be investors.
However, despite these positive figures, Hometrack and other industry experts expect house price growth to slow down, thanks to the Brexit vote. If prices were to drop, this would be of benefit to first time buyers. According to the English Housing Survey, the proportion of first-time buyers purchasing on their own has fallen by half in the past 20 years.
The report reveals some interesting stats about first time buyer profiles – for example, they have higher incomes and more assistance with funding a deposit than was needed 20 years ago. Interestingly, three-quarters of first time buyers fall in the top two bands of highest earners – an increase from 62 percent in 1994/95. However, the Report shows that of the 4.3 million households (19 per cent of all households) who rent from private landlords, only 10 per cent prefer this to owning their own home. Two thirds say that affordability is the biggest barrier to home ownerships. The figures show that the shortage of affordable properties is keeping millions from purchasing their own home.
If you are struggling to get a foot on the housing ladder and would like to know more about the schemes available to help you, why not get in touch with our property team.