March saw mortgage lending power ahead and reach an eight year high. The sluggish trend witnessed at the end of last year was reversed and the statistics indicate that confidence has returned to the market.
There were lingering doubts over the market recovery towards the end of 2014 and it’s therefore encouraging to see such positive movement so far this year.
Recent analysis* showed that buy-to-let mortgage lending in Q1 2015 grew by nearly 20%, when compared to the same period last year, dramatically outpacing residential mortgage lending which was up by just 1.6%. The buy-to-let market is set to continue to gather pace and witness substantial growth as traditional savings accounts continue to offer low returns and savers look for alternative ways to invest their money. In addition to this, the new pension flexibilities, which give people aged 55 more freedom to decide how best to spend their retirement pots, may see more retirees taking their cash in a lump sum. Many are keen to purchase an investment property in a bid to generate a regular source of income and with an oversupply of people looking for somewhere to live and an undersupply of homes, this makes buy-to-let an attractive proposition.
Total mortgage lending for the quarter stood at £36.2bn, a year-on-year increase of 5.4%. Lending in March was also up 24.3% on February 2015, reaching £15bn. The market saw UK wide improvement with only two postcode areas, Perth and the Western Isles, reporting negative growth during the month. The average value of each mortgage has also risen and for Q1 this year sits at £177,060 for a residential mortgage (Q1 2014: £170,730) and £151,033 for a buy-to-let mortgage (Q1 2014: £145,017). Part of the increase can be attributed to the changes to the stamp duty system that were announced in December 2014, which will be pushing the value of properties up as prices no longer have to sit around the stamp duty thresholds.
Our data*, which covers 92% of the intermediated lending market, also showed that March was the top sales month for mortgage brokers in eight years. However, despite growing lending levels, the number of active brokers in the market has fallen in the last 12 months, down from 8,288 in Q1 2014 to 8,028 in Q1 2015. This market consolidation means that it is now even more important for mortgage providers to identify which networks and firms are leading the charge and successfully responding to the rapidly changing mortgage landscape and the requirements of the Mortgage Market Review.
The lending market started the year lagging slightly behind January 2014. However, more positive figures for February and March quickly dismissed any reports of a fragile market and the remainder of the year looks on track to continue climbing a upward curve.
* From Equifax Touchstone which utilises intermediary and customer profiling tools to provide financial services providers with a detailed understanding of their marketplace and client base.
Equifax Touchstone Financial Analytics and IXI
Equifax Touchstone is the UK’s leading provider of strategic intermediary intelligence to financial product providers, delivering powerful benefits to its users. It operates a shared investment product data exchange with information provided by over 90 of the UK’s leading financial services companies. It also operates the MyTouchstone database which is powered by the collective sales data of 77 major product providers, fund managers and platforms and inputs from thousands of intermediaries to help them understand how they perform compared to the other firms in their post area and across the UK.
Equifax Inc acquired US wealth data specialist, IXI, at the end of 2009. The IXI Corporation has been directly-measuring consumer wealth in the U.S. for the past 15 years.
The unique combination of Equifax Touchstone and IXI is set to bring an unparalleled understanding of consumer wealth and purchase behaviour to the UK for the first time.
About Equifax
Equifax is a global leader in consumer, commercial and workforce information solutions that provide businesses of all sizes and consumers with insight and information they can trust. Equifax organizes and assimilates data on more than 600 million consumers and 81 million businesses worldwide. The company’s significant investments in differentiated data, its expertise in advanced analytics to explore and develop new multi-source data solutions, and its leading-edge proprietary technology enable it to create and deliver unparalleled customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates or has investments in 18 countries and is a member of Standard & Poor’s (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. In 2013, Equifax was named a Bloomberg BusinessWeek Top 50 company, was #3 in Fortune’s Most Admired list in its category, and was named to InfoWeek 500 as well as the FinTech 100. For more information, please visit www.equifax.com.
Iain Hill, Relationship Manager, Equifax Touchstone
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