Housing & mortgage round up: Confusing mortgage and sales data released, whilst Santander anger customers


Housing & mortgage round upNo house prices surveys this week but still plenty of mortgage and housing news for you to catch up on.

This week saw yet more confusing data announced, with reports that mortgage lending jumped in July, whilst the number of house sales fell.

Santander angered many customers by announcing that they will be following the lead of other mortgage lenders and increasing their Standard Variable Rate, whilst a rise in mortgage fraud has been reported by Experian.

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Mortgage lending jumps, but overall picture still flat

Figures from the Council of Mortgage Lenders (CML) show that mortgage lending jumped by 8% in July, after a sharp fall in June, and was up by 2% on the same time last year. The British Bankers Association (BBA) also said that mortgage lending rose in July, this time by 10%.

The figures confirm that there is still significant volatility in mortgage lending, with large peaks and troughs cancelling each other out, to equal a flat market.

Caroline Purdey of the CML said: “Interpretation of recent trends continues to be challenged by one-off effect.”
She continued: “We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through.”

Interestingly, the number of remortgages approved rose by 8%, perhaps spurred on by higher Standard Variable Rates (SVRs) imposed by some mortgage lenders during the summer and the extremely low, long term fixed rates, which have been available over the past month or so from a number of mortgage lenders.

However, as we reported last week, HSBC have now withdrawn their ultra low five year fixed rate, which may mean the number of remortgages slide back over the next couple of months.

Mortgage and housing experts are however almost unanimous in their view that both markets will continue to remain flat whilst mortgage lenders continue to impose such tight lending criteria. It remains to be seen whether government schemes, such as NewBuy and Funding for Lending will help to improve the situation.

Number of house sales fall back

New HMRC data shows that the number of house sales fell back in July.

The total number of completed house sales stood at 81,000 in July, down by 5,000 in June and 2,000 fewer than the same time last year.

For those people looking for signs of a recovery there is a positive note to the new figures, with the total number of house sales up by 9% on the first seven months of 2012, compared to 2011.

Confusing data

The figures showing a rise in mortgage approvals, in the same month that the number of house sales fell, may look incompatible, but experts suggest this is not the case.

Firstly there is usually a delay of up to a month between a mortgage being approved and a house sale completing, meaning that a rise in mortgage approvals in July, could signal an increase in completions in August and September.

Secondly, the BBA and CML figures include people remortgaging their property, perhaps taking advantage of some of the very low fixed rates currently on offer. Remortgages clearly do not feed through into the HMRC data.

However, one thing remains clear, the housing market will continue to struggle whilst the flow of mortgage finance is restricted to those people with large deposits.

For the market to improve significantly, lenders need to provide mortgages at higher loan to value ratios, which will help more people, especially first time buyers, get onto the housing ladder.

Mortgage fraud up by 23%

Experian has found that the number of mortgage applications deemed to be fraudulent has risen by 23% over the past year.

The research, by the Nottingham based company, found that in the first half of 2012, 39 out of every 10,000 mortgage applications were fraudulent, a significant rise on the same time last year.

Although no excurse, the rise in mortgage fraud comes at a time when lenders are still imposing tight lending criteria. Making it harder for many to get a mortgage, with some applicants clearly resorting to lying on their application in the hope it will help them get a mortgage.

The most common type of fraud was by people inflating their incomes, in an effort to secure a larger loan. Other applicants tried to hide a poor credit history, whilst others lied about their employment status.

James Jones, head of consumer affairs at Experian, said: “The increase certainly reflects the fact that many households are increasingly cash-strapped and resorting to ever more desperate measures.

Experian has also reported a rise in the number of people applying for a residential mortgage despite having plans to rent out the property, meaning a buy to let mortgage should have been applied for.

Santander increase its’ Standard Variable Rate

Any hope Santander borrowers had that they had missed the Standard Variable Rate (SVR) rises imposed by many lenders earlier in the summer evaporated this week.

Santander, one of the UK’s largest mortgage lenders, has announced that it will increase its’ SVR by 0.5%, to 4.74% from October.

The news will disappoint thousands of Santander mortgage holders, especially at a time when Bank Base Rate has been at 0.5% for more than three years, the government are making cheaper borrowing available to lenders through the Funding for Lending Scheme and mortgage interest rates are generally dropping.

The move will push Santander’s SVR higher than that of its’ main rivals. After a rise a few weeks ago the Halifax’s SVR currently stands at 3.99%, whilst the UK’s largest building society, the Nationwide, has a SVR of 2.5% for older customers and 3.99% for new borrowers.

There was further bad news for Santander mortgage borrowers as the bank also announced they would be raising their “SVR cap”. Currently 3.75%, the “SVR cap” is the percentage that the bank can charge above Bank Base Rate. Santander has announced that the cap will be increased to 4.99% giving more scope to increase rates further in the future.

It wasn’t only Santander customers who reacted angrily to the news, many experts accused the bank of profiteering, causing particular hardship for those people without sufficient equity in their house to be able to remortgage.

Announcing the decision, a Santander spokesperson said: “Our competitors have increased their SVRs by similar margins earlier this year, reflecting these same market dynamics. While we were able to delay this decision through the first half of this year conditions now require us to follow them, and move to adjust our rate.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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