Buy-to-let borrowing has shot up 42% in the past year as landlords look to complete purchases ahead of the stamp duty changes in April, according to the Council of Mortgage Lenders.
The CML said that in January landlords borrowed £3.7 billion, up 42% from the same period a year ago and 9% from December. House purchase accounted for £1.4 million of this figure while remortgaging made up the rest.
The data from the CML come after a number of reports about the surge in buy-to-let borrowing ahead of the 1 April stamp duty deadline.
First-time buyers borrowed £3.3 billion in January, down 27% on December but up 14% on January last year.
Home movers took out £5.1 billion, a 24% drop on December but up 11% compared to a year ago. Home owners borrowed £8.4 billion for house purchase, down 25% month-on-month but up 12% for the year.
Paul Smee, director general of the CML, said: “We are now pleased to be able to analyse monthly lending on a seasonally adjusted basis. While the unadjusted data appears to show large falls in January compared to December, stripping out the usual January lull we see a general picture of flat house purchase lending but a significant uptick in remortgage activity, as borrowers continue to seek attractive new deals despite the lower-for-longer expectations for interest rates.”
The 3% increase on stamp duty is set to take effect from 1 April as part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers. The basic rate of tax relief landlords can claim on properties is also set to fall to 20% from April 2017.
Adrian Anderson, director of mortgage broker Anderson Harris, said: “While mortgages for home movers and first-time buyers rose year on year but fell in January compared with December, the number of people remortgaging and taking advantage of cheap mortgage rates continues to rise. With us reaching the seventh anniversary since interest rates were cut to 0.5 per cent, some may be thinking that this state of affairs cannot continue forever. Others may simply be thinking that the fixed rates on offer are just too good to miss.
“More landlords are taking out mortgages and remortgaging as they try to buy before the stamp duty hike comes in from April, and are also looking at the costs associated with their investments, minimising their mortgage payments as much as possible.
“Encouragingly, the CML figures highlight that borrowers are being sensible, with average loan sizes and income multiples decreasing, and the percentage of monthly household income spent on service the mortgage also falling. Confidence is high among borrowers more generally as they have good reason to believe that interest rates are likely to remain low for many months to come, but they won’t pay over the odds.”
