Buy-to-let lending dipped at the end of last year while there was an increase in first-time buyer borrowing, suggesting government policies designed to help people get on the housing ladder are working.
According to the Council of Mortgage Lenders, first-time buyers borrowed £53.2 billion in 2016, up 13% on the previous year – the highest amount since records began in 1974.
A total of 338,900 first-time buyer loans were taken out, an increase of 8% from the previous year.
Monthly buy-to-let lending fell 15% by volume and 7% by value from November to December.
Despite this dip at the end of the year, buy-to-let lending increased 3% by volume and 7% by value over the course of 2016. However, remortgaging business accounted for nearly two-thirds of the total.
The number of buy-to-let loans taken out fell from 117,500 in 2015 to 102,100 in 2016.
Since last April, property investors looking to buy a second home have faced a 3% stamp duty surcharge as part of the Government’s plans to curb the buy-to-let market and free up property for first-time buyers.
The CML said that home movers took out 360,300 loans. Although this was down 2% on 2015, the amount borrowed totalled £74.3 billion – up 3% on the previous year.
There was also a surge in remortgaging last year as borrowers took advantage of record low rates.
Remortgage activity went up 20% on 2015 to £66.2 billion – the highest since 2009.
Paul Smee, director general of the CML, said: “2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable.
“Homeowner house purchase lending increased, though the buy-to-let sector’s positive lending performance has been driven primarily by remortgaging. We do not expect the market volumes to show a year-on-year increase in 2017 instead remain similar to that achieved in 2016.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “These figures are particularly interesting on two counts and not least because they bear out with what we have been seeing on the high street. In other words, the housing market demonstrated a fair degree of resilience in the period leading up to the end of 2016 and more significantly perhaps first-time buyers seem to have taken the place of buy-to-let investors in some places, as the latter suffer from more taxes and regulation.
“These results represent good news for the government whose medicine may finally be working in their attempts to level the playing field between those trying to get onto the ladder and those very much on it.”
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