House purchases plummet in Q2 2020
Lending for house purchases fell sharply in the second quarter of 2020 following the suspension of the housing market due to the coronavirus lockdown, according to UK Finance’s latest data.
The report showed that mortgage refinancing decreased but held up better than purchase activity, with a significant shift towards internal product transfers.
Whilst lenders have maintained a cautious approach to underwriting in unprecedented times, higher loan-to-value lending is still taking place and contracted less than the wider market.
Forward-looking data points to a strong initial recovery in early Q3, however, as the backlog of delayed sales complete.
The end of June saw the first wave of mortgage payment deferrals coming to an end, with fewer than 1 million customers now on a payment deferral compared with 1.8 million at the peak in early June.
Eric Leenders, managing director of personal finance at UK Finance, said:
“The economic and logistical impacts of lockdown in the second quarter of 2020, restricting the ability of households to buy or move houses, brought about a radical reduction in activity in the mortgage market and shifted refinancing further towards internal product transfers.
“These impacts are now receding and we are beginning to see some recovery in the housing market.”
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