Gross mortgage figures for the UK in October show lending has softened

Gross mortgage lending across the residential property market in the UK increased by 5.6% year on year in October to £25.5 billion, according to the latest industry figures to be published.

However, the number of mortgages approved by the main high street banks in October was 4.1% lower than last October, the data from UK Finance also shows.

But overall approvals for house purchase were 3.6% higher, while remortgage approvals were 13.5% lower and approvals for other secured borrowing were down by 1.3%.

‘Overall mortgage lending grew in October, despite an uncertain economic environment, while house purchase mortgage approvals by the main high street banks were also up on the previous year,’ said Eric Leenders, managing director of personal finance at UK Finance.

‘However remortgaging activity has softened, following a period of strong growth driven by fixed rate loans reaching maturity and anticipation of August’s base rate rise,’ he added.

According to John Goodall, chief executive officer of buy to let specialist Landbay, increased activity in the mortgage market is likely due to attractive deals being available for those looking to purchase a property.

‘Remortgaging has levelled off after a period of increased activity ahead of the August interest rate rise, but is still buoyant. With asking prices in London dropping, a buyers’ market is developing. We could start to see further small improvements in activity as a result,’ he said.

Johan Groothaert, chief executive officer at Fiduciam, pointed out that the figures still show growth in mortgage lending, albeit subdued growth. ‘They indicate a slowing property market, but not a contraction,’ he said.

‘These figures are UK averages, and therefore they hide the contraction we are witnessing in London and the still strong property markets in the Midlands and North,’ he added.

While John Phillips, group operations director at Just Mortgages and Spicerhaart, believes that the figures simply confirm the uncertainly of the economy and the mortgage market.

‘The figures show remortgaging has fallen, but for us, the remortgage market is still very strong, and purchase has subdued a little, but not a lot. And it is important to keep in mind that this is an overall figure, and we are seeing huge differences across the UK, with London slowing hugely while the North is still fairly strong,’ he explained.

‘I also think what we may be seeing is the traditional end of the year figures coming a little early, but in the current climate, it is very difficult to see any trends at all,’ he added.