The Tracker is powered by data from Mortgage27, a provider of web based mortgage sourcing systems.
Buy-to-let borrowers and aspiring buyers go head-to-head on price
The Tracker showed a coming-together of aspiring homebuyers and buy-to-let (BTL) investors in terms of the price of properties they are targeting.
The average property valuation among aspiring buy-to-let borrowers fell by 6% from £225,234 in Q2 2014 to £212,362 in Q3 2014, while the average property valuation among aspiring homebuyers rose by 4% from £205,484 to £214,615.
It leaves a gap of just £2,253 between the properties targeted by would-be homeowners and BTL borrowers in Q3 2014, down from £19,750 in Q2 2014. Aspiring BTL borrowers also had an average loan requirement of £139,285 in Q3 2013 – 9% less than the £152,539 sought by aspiring purchase borrowers.
Brian Murphy, head of lending at Mortgage Advice Bureau, observed that a drop in the average property valuation among aspiring BTL borrowers suggests that appetite for investing is focusing more on the lower end of the property market.
"Like homeowners, existing landlords will also have benefitted from recent equity gains and this may be helping them put up more of a deposit and scale back their borrowing needs.
While the supply of housing is stretched, there will always be a sense of competition for property. The country needs a healthy rented sector to meet the full range of consumer needs, particularly among people who may be studying or need the flexibility to move for work, and positive actions to meet house building targets will give both homeowners and landlords more room to breathe.”
Using data from over 250,000 monthly searches for mortgage products via price comparison and broker websites, the Tracker also showed aspiring buyers searching for a new mortgage had an average combined income of £56,559 in Q3 2014.
This was up by 5% from £53,879 in Q2 2014 and up 21% year-on-year from £46,905 in Q3 2013: dwarfing the latest 0.8% annual wage growth recorded by the Office for National Statistics (ONS).
The rise in incomes suggests the new focus on affordability assessments under the Mortgage Market Review (MMR) regime is attracting buyers with greater financial resources behind them.
Brian Murphy, head of lending at Mortgage Advice Bureau, remarked that affordability assessments have shone a spotlight on the detail of borrowers’ incomes and expenditure.
"As a result, it may have dampened some speculative interest from lower earners, and while there is still plenty of appetite from prospective purchasers, it is important that the industry continues to work hard to promote affordable options such as shared equity and shared ownership to maintain access to the property ladder.
Overall, the transition to MMR has been far smoother than some had feared and it has certainly put the market on a steadier footing for the future. However, there is still important work to be done in terms of product offers, not just at the margins but also when it comes to the needs of older borrowers.”
