Mortgage lending and consumer credit May (Bank of England)

ended 29. June 2021

Tomorrow morning (Tuesday 29th) at 09:30, the Bank of England is publishing mortgage lending, mortgage approvals, consumer credit and savings data for May. You can see the April report here.

We want your views on activity and trends in May (and just answer the questions that are relevant to you), e.g.

  • In your experience, was  the demand for mortgages in May higher than in April or did it tail off as people thought ‘sod it, I’ve missed the 30 June SDLT deadline'?
  • Do you expect net mortgage lending to have fallen once again in May (as per April)?
  • Did people continue to pay down debt, as has been the case in previous months?
  • Did people continue to put money into deposit accounts or did they start to spend in May as pubs and restaurants reopened?
  • How healthy is the average household's finances in your opinion (in terms of debt and savings)?
  • Do you expect household finances to improve or deteriorate later this year, and why?

As ever, be short and punchy in your alert_responses. Journalists want soundbites not essays.

If you're a Premium user, your alert_responses will be edited to ensure they are as strong as possible and grammatically tight. They'll also go to the top of the viewsWire that is sent to journalists.

 

9 responses from the Newspage community

Star Quote
"We have been warning people about the Stamp Duty deadline since January, but in the past fortnight people have still been asking if we can get them in before it ends. There's a lot of confusion out there. If the hours we are working are anything to go by, demand for mortgages will remain strong even when the first phase of the Stamp Duty holiday is behind us. The property market, as the Nationwide June house price figures have shown, is white hot."
"If anything, demand for mortgages in May was sharper than in April. A year or so of enforced asceticism has seen many people manage to save up for a deposit and that has continued to drive transactions in the market. Even though many people have missed out on the first phase of the Stamp Duty holiday, there is still a lot of demand for property among a nation of aspiring homeowners."
"May was nowhere near as manic as April on the mortgage front, but was still pretty busy. I expect demand for mortgages to cool off slightly during the next few months as children break up from school, the last of the lockdown rules are removed, and people are able to travel more freely. "The end of the first phase of the Stamp Duty holiday is of course going to have an impact on transaction levels, but people should be aware that the lower tier of the holiday continues until Sept 30th, meaning there's still a £2500 saving still to be had. "With the end of the furlough scheme in September, we could see unemployment rise sharply but that may not put too much of a dent into prices as demand still vastly outstrips supply."
"Anyone finding a property and applying for a mortgage in May was probably too late to complete their purchase in time for the Stamp Duty holiday. Indeed, everyone from mortgage lenders and brokers, through to solicitors, estate agents and removal firms have been warning for several weeks that completion by the end of June would be difficult. Recent months have proved the busiest on record for virtually every sector of the property market."
"Across the market as a whole, demand among people looking to purchase a new property recently has reduced as it's been too late to make the Stamp Duty deadline. At the higher end of the market, demand has stayed consistent as the Stamp Duty savings don't make a significant difference at this level. "Interestingly, we have seen a significant increase in enquiries for clients looking for second homes in the countryside or near the seaside. As we move forward, it seems that partly working from home will be the new way of working for many, and therefore a lot of people want a second home to live in away from the hustle and bustle."
"Throughout May and indeed into June, lending levels have been high because there are so many incentives to buy, from the Mortgage Guarantee Scheme to Government-backed savings products. "But higher inflation rates are creeping into the economy, which will inevitably have an impact on how much you pay on your mortgage. Lenders borrow to lend, and if it costs more, they will pass on the cost to the consumer. "Neither a lender nor a borrower be, they say - but homeowners can make the market work in their favour if they seek advice, particularly if that involves checking their current mortgage to ensure they're already on the best deal. Collectively, UK mortgage holders already overpay millions in interest."
"The past two to three months have been our busiest by a distance, with home-movers and first-time buyers doing their level best to beat the Stamp Duty deadline. "We've seen a tremendous spike recently in enquiries from people looking to purchase holiday homes, as many seek to take advantage of the inflated staycation rental yields, which will undoubtedly continue into the winter and beyond. "With lenders allowing many borrowers to use holiday homes for their own personal use for up to 90 days per year, holiday homes may soon well challenge the high yielding buy-to-let properties in the North for the most savvy investment available. "Due to repeated lockdowns, household finances have stabilised over the past 18 months or so, with many people using their increased disposable income to reduce their debt. As our livelihoods return to some sort of normality, subject to no fresh spread or lockdown, household finances will only improve as people get to grips with our new way of living and returning to work full time."
"Demand for mortgages in May was as high as it was in April. The only problem was the lack of stock for sale meaning many people couldn't make use of a mortgage even if they wanted to. Over the past year and a half, many people have focused on paying down debt, partly because they haven't been able to spend money down the pub or on holidays, and this will ensure a certain level of demand remains despite the end of the Stamp Duty holiday. Household finances may well start to deteriorate later this year when the furlough scheme comes to an end and many companies are forced to cut their numbers to remain viable."
“Even though the chance of beating the Stamp Duty deadline was remote, mortgage approvals remained high in May. This shows that record low borrowing rates and the radical shift to homeworking have been as much a driver of transaction levels as tax savings. "The knock-on effect of a fundamental lack of stock is pent up demand, especially among first-time buyers and landlords, and this will support activity levels over the summer. The increased appetite among lenders for self-employed borrowers is also boosting mortgage take-up. Lenders are increasingly concluding that self-employment may be less of a risk than employment in the current market.”