UK Sees Declining Lending Trends for First Time Buyers

Latest data from UK mortgage markets indicate mixed trends for the country’s housing sector. Re-mortgage lending went to its highest in seven years but mortgage lending to first-time buyers was down by 19 percent over previous month.

The Council of Mortgage Lenders (CML) which released the numbers said that it was difficult to identify how much of the results were due to the British vote to exit the European Union (EU) in June as markets were already cooling down earlier. This was the first full-month of results declared after the EU referendum.

In a statement, Paul Smee, director general of the CML said

It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market which was already cooling. It will be quite some time before a full assessment can be made. Borrowers seem keen to take advantage of the wide range of competitive deals in the market and, following the base rate cut in August, this is likely to continue.

Nova Financial

First-time buyers borrowed mortgages worth around £4.4 billion in July which was a drop of 4 percent over July 2015 and drop of 19 percent over last month. Lending to home movers was down by 9 percent over June, reaching £6.2 billion which was a fall of 16 percent over same period last year.

Borrowing by landlords went up by 3 percent to £3 billion but this was a decline of 21 percent over last year during the same period. The rise in purchases by landlords is attributed to the recent decision to increase stamp duty for buy-to-let (BTL) investors, pushing investors to close on their deals before the deadline.

Performance of home owner re-mortgage segment was the most at variance with others. Loans worth £6 billion were taken in July for re-mortgage which was an increase of 7 percent over June and a whopping 20 percent increase over July 2015.

This sharp rise could possibly be due to mortgage lenders providing currently the cheapest-ever rates to borrowers as a result of the low-interest rate environment prevailing across markets. Smee said that BTL investors were still adjusting to the change in stamp duty rates but re-mortgage borrowers had taken advantage of the opportunity.

This month’s performance along with that of April 2016 was the best ever performance since January 2009. Mark Harris, chief executive of mortgage broker SPF Private Clients said that he has seen increased buyer interest in September to close deals with fixed-rate mortgages rates going lower than below.

Charlie Harrison

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