The Council of Mortgage Lending report shows house purchases have declined 16%, a greater amount than expected due to the election.
The CML says lending typically dips in the first quarter of the year and this has been exaggerated as first time buyers and home movers as people delay their plans until after the general election.
Figures show the number of mortgages advanced to homeowners was 40,600 down 1% on January and 16% year on year to February. By value the loans totalled £6.8bn, which was down 3% for the month and 13% for the year.
Remortgage buyers reduced more than expected with 21,500 loans advanced, a decrease of 16% on January and 14% over the year with a loan value of £2.2 billion.
CML expect to see an upturn in mortgage lending during the spring and summer months.
New purchase figures lower
For first time buyers there were 18,700 loans a fall of 1% on January and 16% fall over a year to February. In terms of value the loans were £2.7 billion which is a fall of 4% on January and 13% lower compared to February last year.
Even so, this was the second highest level of first time buyers for the month of February since 2007 and affordability improved with loans at 3.37 times gross income compared to 3.38 times last month.
The typical loan for a first time buyer reduced slightly to £124,000 and gross income for a household was virtually unchanged at £38,500.
For home movers there were more loans at 21,900 declining 2% since January and 16% down over the year. Total loan value for the month of February was £4.1 billion a fall of 2% for the month and 13% over a year.
The typical loan for a home mover was slightly higher at £155,530 and gross income for a household up slightly in February to £54,000.
There is higher activity for older homeowners with equity release buyers accessing cash in their property with a lifetime mortgage to consolidate debt, for home improvements or holidays.
Buy-to-let mortgages remain strong
The CML has said the although the number of buy-to-let mortgages for February are 13% lower at 15,900 compared to January, this remains 11% over the year.
By value this is £2.2 billion of lending which is 12% lower for the month but 16% higher over the year to February.
The increase in buy-to-let mortgages for the year to February is primarily due to remortgages which increased by 31% in terms of value whereas new house purchases were 3% up.
Lenders have been reducing their rates making buy-to-let remortgages more attractive as it is likely the Bank of England will not raise interest rates from the current historic lows until next year.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
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