Press Release Summary = Those wondering what impact trends in the housing market may have on the buy-to-let market may be forgiven for being a bit bemused this week.
Press Release Body = Those wondering what impact trends in the housing market may have on the buy-to-let market may be forgiven for being a bit bemused this week. In the space of a few short days, both Nationwide and Hometrack produced data showing that July house prices rose by just 0.1 per cent, while the Land Registry\'s figures for June showed a fall from 0.7 per cent in May to 0.4 per cent. All the evidence, it seemed, was pointing to a slowdown in the housing market, which from an investors\' point of view, meant that many people who might otherwise look to buy are putting it off until interest rates fall. This in turn means those people will look to rent and thus provide opportunities for the buy-to-let market.
Notwithstanding the unanimous predictions of the 35 economists surveyed by Thompsons and the 61 surveyed by Reuters who all said the Bank of England will hold rates at 5.75 per cent this week, many expect them to go up to six per cent or higher sooner rather than later. Thus, it may be assumed, the housing slowdown could be a sustained one, underpinned by a base rate which stays high (by the standard of recent years at least) and remains so until the Bank is sure inflationary pressures are under control and the monetary policy committee can see the whites of the eyes of the two per cent figure.
Suddenly, it seems, the picture is less clear. New figures from the Bank of England today showed the rate of mortgage lending in June was the fastest in three months, with a rise of £9.55 billion, well ahead of May\'s £8.75 billion and, the Guardian pointed out, speeding up rather than slowing down as the City had predicted, tipping the rise to be £8.5 billion. Add to this the fact that the number of mortgages held steady at 114,000 despite expectations of a fall to 109,000 and some might ask what is going on. Such a figure would appear, despite so many conflicting statistics, to indicate a housing market still in rude health.
Deutsche Bank economist George Buckley certainly appeared to think so, telling the Guardian: \"We expect some weakening in these numbers towards the end of the year, but for now the market seems to be holding up well.\"
But is this truly an accurate picture, or could it be the economic equivalent of a rogue poll, the set of statistics that defies all others and leaves people, depending how it affects them, excited, worried or scratching their heads.
One clue appears to emerge from the British Bankers\' Association (BBA), whose own mortgage figures tell a story more in keeping with the statistics suggesting a housing slowdown. The BBA figures indicate that net mortgage lending rose by £5.06 billion in June, not only less than May\'s £5.83 billion figure but also down on the recent monthly average of £5.3 billion.
Perhaps the Council of Mortgage Lenders has the answer to the contradiction. It has stated that total advances in June stood at a record £34.2 billion. However, it stated, this could be explained by the high number of fixed-rate deals coming to an end in the month, which led to many homeowners remortgaging. It added that net lending would subsequently be more subdued, which would align its view with that of the BBA.
Thus, despite the Bank of England statistics, the overall picture still seems to be one of a slowdown. In this context, the apparent resilience of the residential mortgage market may be short-lived. As the chief economist at the Royal Institution of Chartered Surveyors, Simon Rubinsohn, said: \"The volume of mortgage approvals may have proved more resilient than expected in June but, as recent interest rate increases get fully passed through into borrowing costs, we expect to see more evidence of a cooling in demand for property.\"
2025
