First-time buyer lending shot up in June, suggesting the stamp duty reforms designed to make the housing market a more level playing field for those looking to get on the property ladder are already beginning to work.
According to new figures from the Council of Mortgage Lenders, first-time buyers borrowed £5.5 billion in June, up 28% on May and 25% on the same time last year. A total of 34,300 loans were taken out, up 24% month-on-month and 17% year-on-year.
In April, a 3% stamp duty increase was introduced as part of the government’s attempt to curb the buy-to-let market and free up property for first-time buyers.
In the run-up to April’s stamp duty hike there was a boom in borrowing as buyers brought forward transactions to beat the deadline which was followed by a dip in May. Things now appear to be picking up though.
Landlord borrowing went up 12% for June to £2.9 billion, but was down 15% for the year. This came to 18,300 loans in total, up 8% compared to May and 17% compared to June 2015.
The data showed that home movers borrowed £6.9 billion, up 33% on May and up 5% compared to a year ago. This represented 33,900 loans, up 28% month-on-month increase and a slight rise of 0.3% compare to June 2015.
The figures predominantly cover activity in the run-up to the referendum and suggest the market remains robust despite uncertainty from home buyers.
Paul Smee, director general of the CML, said: “First-time buyers are continuing to drive house purchase lending, outperforming home movers for the third month running. More loans were advanced to them in June than at any time since August 2007.
“Buy-to-let house purchase activity remains lower than before the stamp duty changes at the beginning of April, but showed a large month-on-month increase. As might be expected, buy-to-let remortgage seems to have been less affected by the changes and remains consistent with lending last year.”
John Phillips, SpicerHaart and Just Mortgages group operations director, said: “The increase in first-time buyers in June may show that the Chancellor’s plans, in squeezing the buy-to-let market, were having an effect before the referendum. The momentum was there before the vote and with the recent cut in interest rates there may be enough stimulus to continue to get this sector of the population onto the property ladder and keep the market moving.”
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