Home buyers start the year strongly with mortgage lending of £8.9 billion in February which is an increase of 7% over the month.
Research from the Council of Mortgage Lenders (CML) showed home buying, including first time buyers and home movers, borrowed £8.9 billion in February 2017 an increase of 6.0% for the month.
The total number of home buyers also increased from 45,600 to 48,600 or a rise of 6.6% for the month although annual figures show differences.
Over the year first time buyer numbers were up 11.0% and by value higher by 11.8% to £3.8 billion whereas home movers experienced a decrease of -5.8% of numbers and a fall in values of -3.8% to £5.1 billion.
The average amount borrowed by first time buyers was £132,100 and for home movers this was £175,300.
Large drop in remortgage buyers
In contrast the number of remortgage buyers reduced by -22.9% for the month from 40,200 mortgage loans advanced in January to 31,000 in February.
The total value of loans arranged fell by a greater amount of -25.7% or by £1.8 billion from £7.0 billion to only £5.2 billion.
Even so, when compared to February 2016 figures for the number of buyers were 8.8% higher and value of loans 8.3% higher over the year.
Paul Smee, director general of the CML said, seasonal factors traditionally keep the market quieter in winter months, but 2017 began relatively strong on the house purchase side.
This is down to strong first-time buyer activity which has consistently matched home mover borrowing over the past six months, a trend not seen in the UK for 20 years.
Borrowers took out more loans to purchase a home in the first two months of 2017 than any year since 2007, says Mr Smee.
There is significantly higher activity from older homeowners where equity release buyers access wealth in their property using lifetime mortgages to help maintain their standard of living as costs rise.
Buy-to-let lending remains weak
The number of new house purchases for buy-to-let landlords has reduced by a significant -44.7% to 5,700 and in terms of value this is lower by -46.7% to £0.8 billion.
Over the month the number of remortgage loans has reduced by -16.5% from 13,900 in January to 11,600 in February.
The value of buy-to-let remortgage loans has reduced by -13.6% or £0.3 billion from £2.2 billion to £1.9 billion over the month.
Mr Smee said, house purchase activity on the buy-to-let lending side remains weak and this trend is expected to continue because of the tax changes from April 2017.
This is in addition to changes from April 2016 where Stamp Duty Land Tax (SDLT) for new buy-to-let properties increased by 3% on the whole purchase value which also applies to people buying a second home.
The following table shows how this is changing:
| Property Values | Standard Rates | Buy-to-Let Rates |
|---|---|---|
| Up to £125,000 | 0% | 3% |
| £125,000 – £250,000 | 2% | 5% |
| £250,000 – £925,000 | 5% | 8% |
| £925,000 – £1.5m | 10% | 13% |
| over £1.5m | 12% | 15% |
Lenders are also tightening affordability criteria in response to the regulators mandated stress tests.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything or even benefit a family member.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator.
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