Despite a seasonal dip, lending to first-time buyers, buy-to-let landlords and home movers grew in November compared to the previous year, new data shows.
According to the Council of Mortgage Lenders, UK house purchase lending was £10.7 billion in November, down 9% on October due to the winter slowdown, but up 18% on November 2014.
Home movers borrowed a total of £6.5 billion, a year-on-year increase of 20%, while remortgage lending was up 36% from 2014 to £4.9 million.
Paul Smee, director general of the CML, said: “As expected, mortgage lending activity eased back as the normal dip in the winter months began. There was still growth across all lending types in November compared to the year earlier suggesting continued improvement. Our forecasts anticipate that gross lending will continue a slow but steady upward trajectory over the next two years.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that while lending had slowed in November, volumes were still higher than last year, “reinforcing the impression of a robust market”.
“Lenders had a keen eye on year-end targets so there were some very competitive deals to tempt borrowers towards the end of last year, a trend that has continued into this one. The January sales has brought plenty of attractive deals, with many aimed at those coming up to remortgage who may be concerned that interest rates might finally rise this year,” said Harris.
Buy-to-let
The number of buy-to-let loans made in November jumped 35% from the previous year to 23,300.
Although gross buy-to-let borrowing was 8% down on October, overall it was up £3.4 billion on the previous year. Within this figure, £2.1 billion was handed out to buy-to-let remortgagers, while £1.3 billion was advanced for house purchases.
Stuart Law, CEO at Assetz for Investors, said the growth in buy-to-let reflected the continued confidence and demand among investors for UK property as an investment vehicle.
“The increase could be attributable to the recent relaxation in pensions which now allow retirees to withdraw lump sums for other uses or could be as a result of general post-election confidence.
“This surge will continue to be present in the data over the next few months as we see a wave of prospective investors looking to make their move before the new stamp duty policy penalising second homes comes into force in April 2016. Thereafter however, we will likely see the figures decline as the new taxes on buy-to-let start to deter investors a little.”
First-time buyers
First-time buyers took out £4.2 billion in loans during November, up 14% on the previous year. The number of loans for the month fell 8% to 27,900, but this was 10% higher than in November 2014.
Paul Smith, CEO of haart estate agents, said: “It is interesting to see the value of lending has increased substantially, despite the chronic shortage of housing stock – this just goes to show how substantial the increases in average property prices have been over the last year.
“However, first-time buyers may find they are in for increased competition for a limited number of properties over the coming months. We have already seen a surge in registrations from buy-to-investors since the Autumn Statement in anticipation of the 3% stamp duty surcharge which is effective from the 1st of April 2016. This could mean the stamp duty payable on a property worth £275,000 could rise from £3,750 to £12,000. The balance of power should however shift toward first-time buyers after April, as demand from buy-to-let investors recedes.”
