Mortgage Market Sees Fifth Consecutive Month of Growth

The UK residential mortgage market has seen a significant surge in transactions, with May marking the fifth consecutive month of growth. According to HMRC data, the number of transactions jumped by 17% to 91,290, up 2% on the previous month. This upward trend is fuelling industry hopes for a strong start to the year.

Image: UK Housing Market

Industry experts believe that the reduction in fixed-rate mortgages by several lenders, on the back of cheaper funding rates, is contributing to the growth. Mark Harris, chief executive of SPF Private Clients, notes that while these reductions are encouraging, they are unlikely to become more sustained until the Bank of England starts cutting interest rates.

“Several lenders have reduced fixed-rate mortgages for borrowers taking out new deals on the back of cheaper funding rates, which is encouraging and hopefully a sign of better things to come.” - Mark Harris, SPF Private Clients

The base rate has remained at a 16-year high of 5.25% since last August, with the central bank voting to maintain the figure for a seventh consecutive meeting earlier this month. However, many economists predict that rates could reduce at the next vote in August.

Image: Interest Rates

The mortgage market is also seeing positive news from other quarters. LendInvest has removed the need for signed application declarations across its full mortgage range, allowing brokers, underwriters, and case managers to spend less time chasing signatures and more time supporting customers in securing the right mortgage.

“This is another small but impactful change we are offering brokers and their customers, that makes a big difference over the lifetime of an application, made possible by the technology in our Mortgages Portal.” - Sophie Mitchell-Charman, LendInvest

The Land Registry has also reported a 6.6% increase in completed applications in May, further boosting the market.

Image: Land Registry

However, the Bank of England has warned that around three million UK households are still set to witness hikes in their mortgage repayments over the next two years. The central bank’s Financial Policy Committee (FPC) said this will include “very large increases” of more than 50% for the mortgages of around 400,000 households.

“About three million UK households are still set to witness hikes in their mortgage repayments over the next two years.” - Bank of England

Despite this, the mortgage market remains robust, with many economists predicting a strong second half of the year for the property market.

Image: Mortgage Market

Overall, the UK mortgage market is showing signs of growth and resilience, despite the challenges posed by rising interest rates and mortgage repayments. As the market continues to evolve, it will be interesting to see how lenders, brokers, and customers adapt to the changing landscape.

Image: UK Mortgage Market