According to UK Finance, gross buy to let lending in October increased to £3.3bn, from £2.9bn in September, this continued growth followed Q3 lending of £8.6bn – which was £1.2bn up on Q2. Notably, buy to let purchase transactions in October increased to 7,200 and £1.1bn – the highest purchase figures since November 2017.
Buy to let’s share of total lending in October was virtually unchanged at 13.4%.
Total market lending increased to £24.7bn in October from £21.9bn in September. Like buy to let, purchase activity increased by c.£3bn in October, and although remortgaging remained broadly static, it is down by almost £1bn since July while purchase activity increased by £5.7bn over the same period, potentially indicating a preference for moving house or waiting a while before committing again.
Indeed, the market has been so strong that many lenders are having to restrict their offers in order to ensure they can successfully manage existing pipeline business to completion. Others with in-house processing, as is the case here, we have been able to redeploy staff to areas such as underwriting and completion when it’s needed most, without impeding the ability to service new business.
The SDLT reduced rates will continue to provide a near term boost to the housing market into Q1 2021 however the outlook beyond Q2 is uncertain. It is for this reason that mortgage intermediaries now need to look to those transactions that can continue regardless such as remortgages.
Most forecasters predict rising unemployment through Q1 as Government support for the labour market unwinds, and it now looks increasingly likely that there will be no free-trade agreement with the EU, which will almost certainly have a short-term negative impact on the economy and jobs.
These factors would dampen housing activity, although conversely the pending roll-out of vaccines against Covid-19 may support a more buoyant economy in Q2/3 than anticipated.
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