Construction companies’ gross mortgage credit increases by a third in the first quarter – BSA

Construction company gross mortgages rose 33% to £ 17.9 billion in the first quarter compared to the same period last year, according to figures from the Building Society Association (BSA).

Loans were also up from £ 15.9 billion in the previous quarter, a change of 13%.

The number of approved mortgages also increased by 18% from the first three months of 2020, with 118,843 loans authorized between January and March of this year. This is, however, a slight decrease from the fourth quarter, when lenders approved 121,761 mortgages.

The market share held by construction companies remained stable at 23 percent. Mutuals held outstanding mortgage balances of £ 342.5 billion in the first quarter.

Robin fieth (Photo), managing director of BSA, said: “The housing and mortgage markets remained at full strength throughout the first three months of the year, with buyers rushing to take advantage of the stamp duty holiday that was to be expected. initially end on March 31. “

Some 26,000 first-time buyers obtained their mortgage through a mortgage company during the quarter.

Looking ahead, Fieth called for lower house prices to support young buyers and a re-examination of the stress test in light of low interest rates.

He added: “A stabilization in the growth of house prices would be welcome, especially for young buyers who continue to struggle to raise the necessary deposit or meet regulatory criteria for affordability.

“With interest rates likely to stay low for some time, a reduction in the mandatory stress test of 3% would be welcome, although a thorough assessment of a borrower’s repayment capacity remains essential. ”

Support needed to avoid repossession

Fieth added: “Although most borrowers who have taken advantage of a mortgage payment deferral have resumed their payments, a small proportion are in longer-term financial difficulty even before government support programs like the end of the holiday. .

“Lenders will continue to offer tailor-made forbearance, but repossession will inevitably be the only possible alternative for some, even if it remains an absolute last resort for lenders.

He said: “We urged the government to do what it did during the financial crisis and reduce the wait time for government assistance through the 39 week mortgage interest loan (MMI) support. to 13.

“Repossession brings dislocation and distress – the very last thing that fosters economic recovery. The SMI also represents much better value to the taxpayer than the relocation costs and housing allowances.

Shekina is the Business Writer at Mortgage Solutions. She has over four years of experience in the B2B publishing market, with previous industries such as accounting, pets, funeral directors, hospitality, retail, and jewelry. She currently reports on mortgage market news and liaises with financial clients to produce sponsored content. Follow her on Twitter at @ShekinaMS

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