Data from the CML shows remortgage lending for homeowners and buy-to-let market rises significantly by numbers and value for January.
The Council of Mortgage Lenders (CML) has released figures showing a 28.3% rise in the number of homeowner remortgage buyers with buy-to-let landlords up 12.6% in the month to January.
Over the year to January buy-to-let remortgages are up 38.1% to 13,400 loans compared to homeowners higher by 19.1% to 33,100 loans.
In terms of value remortgage buyers for homeowners increased from £4.3 billion in December to £5.8 billion in January or 34.9% higher compared to buy-to-let higher by 15.8% to £2.2 billion.
Over the year to January remortgage lending by value for buy-to-let is higher by 46.7% compared to homeowners up by 31.8%.
Buy-to-let surge before stamp duty rise
Buy-to-let landlords are actively buying homes to beat the rise in stamp duty in April this year as 21.8% more loans are arranged over the last year to January.
A total of 9,500 new buy-to-let mortgages were taken out by landlords with the value of lending rising 40.0% from £1.0 billion last January to £1.4 billion this year.
From April 2016 the Stamp Duty Land Tax (SDLT) for new buy-to-let properties is increasing by 3% on the whole purchase value and this will also apply to people buying a second home.
The following table shows how this is changing:
| Property value | 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% |
For residential properties up to £125,000 the SDLT is zero but for landlords the new tax is 3% or an extra £3,750.
The tax is related to the price of the property and with a £300,000 purchase price a landlord will pay £14,000 in stamp duty compared to only £5,000 for homeowners.
First time buyer lending is lower
The number of first time buyers loans is significantly lower down 27.5% for the month with the number of loans reducing from 29,500 in December to 21,400 in January.
In terms of value lending has reduced 26.7% from £4.5 billion to £3.3 billion over this period although this remains 13.8% higher than a year ago.
Family members can help first time buyers where equity release buyers access wealth using a lifetime mortgage and give a deposit to children or grandchildren.
For home movers the figures are similar with the number of loans over a month have reduced 26.4% from 33,700 in December to 24,800 in January. By value this has reduced from £6.7 billion to £5.1 billion over the month.
Paul Smee, director general of the CML has said the number of first time buyers and home movers is the lowest month since February 2015, although the dip in activity is in line with seasonal expectations.
The surge in remortgage buyer loans was evidence that homeowners and buy-to-let landlords continue to seek attractive new mortgage deals despite the lower-for-longer expectations for interest rates.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or reduce inheritance tax owed by your beneficiaries.
Learn more by using the equity release calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
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