£1m mortgages soar 24% in 12 months

£1m mortgages soar 24% in 12 months
As the balance of lending shifts to the owner occupiers’ favour, it is smaller developers that are losing out

The latest analysis by peer to peer secured lending platform, Lendy, has found that the number of new residential mortgages worth over £1 million went up by 24% last year, as banks continue to favour lending to owner-occupiers and reduce lending to property developers.

According to the data, the number of new £1 million-plus mortgages written by banks last year increased to 4,844, up from 3,896 in 2015. The total value of these mortgages rose 18% over the same period to £8.95 billion from £7.59 billion.

Lendy explains that regulations such as Basel III have incentivised banks to take risks in the owner-occupier market and cut exposure to property developers, with the availability of funding for developers diminishing as a result.

Recent research from Lendy found that outstanding bank lending to developers fell 7% last year, to £14.8 billion in 2016 from £16 billion in 2015.

Lendy says that too much funding to owner-occupiers just leads to house price inflation. Increased funding to developers increases the supply and moderates house price inflation.

Lendy adds that the UK’s housing crisis could worsen if banks continue to favour owner-occupiers over property developers, who build homes for more people and at faster rates than small housebuilders.


The Government’s Housing White Paper, released in February, has targeted up to 270,00 new homes every year to meet demand – only 190,000 were built last year. Lendy says that developers need more financial backing from banks to get spades in the ground to hit housing targets.

The lack of funding has led many developers to choose alternative forms of finance such as peer to peer lending to fund their projects. For example, Lendy’s loan book has increased to £171 million from just £73 million in December 2015.

Liam Brooke, co-founder of Lendy, comments: “As more and more money goes to owner-occupiers, boots will struggle to get on the ground working to hit the Government’s housing target. Housing targets will continue to be missed unless banks allocate more money to developers who build multiple homes at rapid rates.”

As the balance of lending shifts to the owner occupiers’ favour, it is smaller developers that are losing out.

It is these small and medium sized developers especially that have found it hard to get funding from banks since the financial crisis. Peer to peer platforms such as ourselves are contributing more and more in getting new developments off the ground.”

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Latest Comments

Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

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Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

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Izzy
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

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paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

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CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

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warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

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Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

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Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

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MH
MH 13 Apr 2017

You are right that the bank holidays are going to be spoiled in looking for the properties. But people who want to sell their property and looking for the better relocation, they can get benefits of this...

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bnellyb
bnellyb 08 Apr 2017

There will be an exodus of private landlords over the next 5 years as tax changes take effect, private landlords provide an important service to the rental market, why do housing associations and councils...

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Fred Cassman
Fred Cassman 07 Apr 2017

"Make it look like you are at home": often people forget this and share on facebook their location!

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jared townsend
jared townsend 05 Apr 2017

It'll be interesting to see how & if the Government's asset sale regarding mortgages helps

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