The 19 places where lending has fallen as house prices kept rising

The 19 places where lending has fallen as house prices kept rising
The 19 places where lending has fallen as house prices kept rising

A ‘bubble alert’ for 19 towns and cities across England where lending has fallen as prices continued to rise has been issued by UK-wide mortgage broker One 77 Mortgages today.

Analysis shows Cleveland is way out in front as One 77’s experts warn buyers to ‘“mind the gap” between the fall in borrowing and rise in prices which has reached 11.9%, according to latest figures released this week.

Blackburn is the second most vulnerable place to face an affordability crunch with a gap of 6.8% while summer getaway hotspot Blackpool placed third with a gap of 6.2%.

London has traditionally been seen as a bellwether for house price growth nationally, as price growth ripples out across the country.

However, only FOUR of the 19 areas were in the South sparking fears the market in the North may have already caught a cold.

Truro, Torquay, Plymouth and Dorchester are the only Southern areas to feature with an average drop in lending of 0.5% and price increase of 4%2.

The shrinking risk appetite in all these areas could be a result of high valuations and stricter lending criteria impacting how much buyers are able to raise to fund their purchases.

The latest postcode lending statistics cover the first quarter of 2017, against a backdrop of annual house price growth in England of 4.2% in the 12 months to March3.

The largest overall fall in lending occurred in Darlington and Sunderland where borrowing fell 1.4%, or £46m and £27.5m respectively.

Area

Annual Change in lending

Annual Drop in Lending

Annual House Price Change

% Gap

Cleveland

-0.9%

£53,589,511

11.0%

11.9%

Blackburn

-0.6%

£27,761,009

6.2%

6.8%

Blackpool

-1.2%

£36,189,774

5.0%

6.2%

Torquay

-0.6%

£24,541,823

5.0%

5.6%

Bolton

-0.1%

£4,709,553

5.2%

5.3%

Plymouth

-0.3%

£21,373,711

4.5%

4.8%

Bradford

-1.0%

£57,588,683

3.7%

4.7%

Liverpool

-0.2%

£19,030,886

4.5%

4.7%

Dorchester

-0.7%

£19,963,937

3.5%

4.2%

Harrogate

-0.3%

£7,001,238

3.7%

4.0%

Darlington

-1.4%

£45,969,751

2.6%

4.0%

Carlisle

-0.5%

£10,849,257

3.4%

3.9%

Doncaster

-0.7%

£49,802,527

2.8%

3.5%

Sheffield

-0.1%

£16,076,849

2.7%

2.8%

Huddersfield

-1.1%

£31,045,436

1.6%

2.7%

Sunderland

-1.4%

£27,565,238

1.0%

2.4%

Hereford

-0.6%

£12,379,549

1.6%

2.2%

Newcastle upon Tyne

-0.7%

£76,875,551

1.0%

1.7%

Truro

-0.2%

£7,329,788

1.2%

1.4%

Source: UK Finance Q1 2017 postcode areas compared with local authority UK HPI March 2017 vs March 2016.

Alastair McKee, managing director of One 77 Mortgages, said:

“Demand is what drives sentiment and sentiment is what drives prices. But somewhere in the middle people still need to borrow.

“It’s a case of mind the gap for buyers in these areas as lending takes a different trajectory to prices.

“Shrinking mortgage lending sticks out like a sore thumb when you have continued annual house price growth.

“In those areas where the two are headed in different directions, this is likely to be the result of first-time buyers beginning to vote with their feet in the face of steep valuations coupled with smaller budgets thanks to stricter lending criteria.

“If opinions about these stretched valuations are starting to feed through into these borrowing numbers then it’s vital purchasers are even more careful not to end up sitting on unnecessary losses.

“This is especially important if you are still looking to buy using the Help To Buy scheme which could mean you own as little as 5% of your property to begin with.

“Buyers have to be careful that, with interest rates still temptingly low, they don’t jump in with both feet by borrowing too much in a local market that is possibly braced for a fall.”

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