Posted on 29 August 2017 by
Last week the July housing and mortgage statistics were announced by HMRC (looking at housing transactions), UK Finance (looking at gross mortgage lending) and Equifax Touchstone (looking at intermediated mortgage sales) and something doesn't add up.
To provide some addition perspective mortgage approvals in June were up on May’s numbers for both purchases and remortgages, the combined increase being 5.7%. Likewise, the May numbers were well up on April, although April approvals were well below March levels, no doubt partly influenced by the late Easter this year.
Although average mortgage sizes have increased over the year, broadly by the same percentage as the increase in house prices, there is no reason to expect a significant month on month change. Likewise, although the share of intermediated lending has increased over the last few years it is unlikely to vary much on a monthly basis.
These figures therefore provide some conundrums, unless there are some massive revisions to some of the figures as more data is received. One would expect the increase in month on month mortgage approval numbers in May and June to feed through to some increase in both housing transactions and mortgage lending in July but housing transactions fell by 10.3% and according to Equifax Touchstone intermediated lending fell by 10.8%.
The discrepancy between the UK Finance and Equifax Touchstone figures is far too great to be within the margin of error and so one of them must be wrong. Previous UK Finance gross lending figures have been broadly in line with similar figures subsequently published by the Bank of England, whose July numbers will be published on Wednesday 30 August 2017.
If anyone can provide some insight into any of the conflicts highlighted above please leave your comments below.
Today’s figures from the Bank of England explain over half of the apparent discrepancy between the July numbers from UK Finance and the HMRC housing transaction plus Equifax Touchstone numbers.
The BofE number for total July mortgage lending is £22.748bn, 1.1% less than UK Finance’s estimate of £23bn. Furthermore, June’s revised gross lending figures are £23.147bn from the BofE and £22.6bn from UK Finance. Therefore, for the month on month comparison the BofE starting point is over £½bn higher than UK Finance.
The net result is that the BofE has gross mortgage lending in July 1.7% higher than in June, whereas according to UK Finance it was 1.8% lower.
The other major, and even more important, factor is the divergent trend in purchase and remortgage lending, as identified by today’s BofE figures, but with the breakdown not yet published by UK Finance.
The BofE reported that lending for purchases fell by 6.9%, from £14.816bn to £13.797bn, whereas remortgage lending increased by 10.1%, from £7.148bn to £7.871bn.
This 6.9% fall in purchase lending fits reasonably well with the 10.3% fall in residential transactions but the differential to the 10.8% fall in intermediated lending reported by Equifax Touchstone still looks on the high side.
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