Everyone needs a home, and as a result the housing market is very important to the UK economy. Homes cost money, whether you rent or buy yours; so mortgage lending figures serve as a key indicator of the UK’s health and stability.

Mortgages: an indication of the country’s financial health

Mortgage lending is the primary method that individuals and families in the UK finance their home purchases.

Buying a home is a complex process that involves lenders and borrowers as well as solicitors, estate agents and others, but in recent years there has been a notable shift influenced by economic conditions, government policies, and market dynamics.

The effect of mortgage interest rates

Interest rates play a crucial role in determining mortgage affordability. The Bank of England’s base rate underlies the cost of a mortgage, and as this base rate has increased steadily in recent months to combat inflation, it has become less likely that potential homebuyers can afford the mortgage they want.

The UK housing market has been levelling out in 2023, with annual house price growth slowing and demand starting to increase again after the September 2022 mini-budget.

The balancing out of the market, along with a rise in mortgage approval rates means that first time buyers are having a marginally easier time when entering the market than they would’ve had just last year.

Interest rates, inflation, and affordability

Even though the brakes have been applied to house price growth, house prices continue to outpace wage growth and it still means affordability constraints for homeowners.

Mortgage lenders have to carefully assess each applicant’s financial stability and repayment capacity which seems to be getting lower and lower as inflation bites.

Government interventions

In the past, government has offered schemes such as Help to Buy and stamp duty reforms to try and assist potential homebuyers. Howevr, economic factors like inflation, job insecurity and increases to the Bank of England’s base rate can still have an impact on mortgage lending.

Mortgage lending figures are an essential gauge of the UK housing market’s health and vitality. Understanding the dynamics of mortgage lending, including trends, challenges and opportunities allows borrowers to make informed decisions.

The 100% mortgage

Skipton Building Society introduced an interesting new product in May 2023: a 100% no-deposit mortgage deal that you may qualify for as a first time buyer. This has been implemented to help renters with a good history of paying on time to transition into home ownership.

Potential borrowers can find out if they qualify here: Track Record Mortgage – Skipton Building Society.

Talk to us about your conveyancing

When you are going through the home-buying process, you’ll also need to speak to a reputable conveyancing solicitor.

Contact our expert property solicitors at one of our branches across England, in Braintree, Brighton, Chelmsford, Croydon, Hornchurch, Solihull or Wickford for help.

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