Buy-to-let lending fell a whopping 85% in April following the rush to beat the stamp duty deadline, new figures show.
According to the Council of Mortgage Lenders, landlords took out 4,200 loans, down from 28,700 the previous month. On an annual basis buy-to-let lending was down 51% from 8,600 loans in 2015.
Paul Smee, director general of the CML, said: “There is a sense of calm after the storm this month, as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property stamp duty deadline. We expect the market to take several months to return to its previous levels after the lending surge.”
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.
The number of first-time buyers and home movers taking out loans also fell over the month, while remortgage activity has soared.
First-time buyers borrowed £3.9 billion, down 11% on March but up 15% on April last year. Home movers borrowed £4.3 billion, down 53% on March and 14% compared to a year ago.
Remortgage activity was £6 billion, up 25% on March and 40% compared to a year ago.
John Phillips, group operations director of Spicer Haart and Just Mortgages, said: “Due to the recent stamp duty change and the availability of more low interest rate mortgage deals, it’s no surprise that homeowner house purchase lending was down in April. In light of the recent peak which resulted in the rush to beat the tax hike on buy-to-let, the dip in lending in the first quarter was to be expected.
“The CML’s latest figures show that although house purchase activity has experienced a sharp fall month on month, the market is still underpinned by strong fundamentals such as rising employment and improving wages, suggesting that the market will continue to grow but is likely to take several months to return to its previous levels of lending.
“Although lending will continue to be driven by movers, first time buyers and remortgage customers, I think the unknown effect of the impending EU referendum later this month will certainly weigh on activity in the coming months, as borrowers wait to see the result and its impact on the housing market.”
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