Mortgage lending has bounced back following a dip in July as confidence returned to the market following the Brexit vote, new data has revealed.
According the Council of Mortgage Lenders, homeowners borrowed £12.2 billion for house purchase, up 14% for the month and 11% from last year. They took out 66,000 loans, up 13% on July and 9% on August 2015.
Lending to first-time buyers rose 13% from July and 24% from August 2015to £5.1 billion. This equated to 31,800 loans, a 12% month-on-month and 19% compared with last year.
Remortgage activity dipped 2% in August to £5.9 billion, but this figure was up 41% compared to a year ago.
The number of homeowners remortgaging rose 4% to 34,900 loans for the month – the highest monthly level since July 2009.
Paul Smee, director general of the CML, said: “House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity. Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months.”
Buy-to-let activity remained subdued in August following the stamp duty hike of 3% earlier in the year.
Landlords borrowed £3 billion, unchanged month-on-month but down 12% compared to the same period last year. This came to 19,400 loans in total, up 4% compared to July but down 13% compared to August 2015.
“Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels,” said Smee.
David Brown, CEO of Marsh & Parsons, said: “August’s figures from the CML present a picture of a return to normality following the UK’s vote to leave the EU, with homeowner lending up year-on-year and from the previous month.* Despite the many uncertainties that still surround which form of Brexit the country will take, for many, the dust has settled and property remains a safe bet.
“First-time buyer growth is also positive and suggests the UK’s enthusiasm and appetite for home ownership has not been dented. It’ll be interesting to see what happens over the coming months with this group: confirmation that the Help to Buy Mortgage Guarantee scheme will end later this year could see first-time buyers clamouring to purchase before then.
“The collapse of the pound also means the UK property market – particularly London, which has long been a favourite for overseas investment – is more attractive. Further falls, as predicted by the Bank of England’s new policy maker, Michael Saunders, are unlikely to change this any time soon adding further demand and bolstering the property market.
“All-in-all the market remains in robust shape, confidence is high and we expect momentum to be maintained throughout the rest of the year.”
