£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

Tony Gimple
Tony Gimple 09 Dec 2017

Linking professionalism to limited company borrowing is a flawed concept. Despite S24 etc., limited companies are the most tax inefficient way of running a property business and leave borrowers seriously...

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

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richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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