First-time buyers continue to buoy mortgage market

First-time buyers and those remortaging continue to drive lending activity, according to the Council of Mortgage Lenders (CML), whilst the number of home movers and buy to let borrowers is falling.

The number of buy to let purchases is nearly half what it was a year ago, the CML said, averaging around 6,000 purchases a month over the last 12 months. Buy to let figures have fallen dramatically following the introduction of the second home stamp duty surcharge in April last year and have failed to recover since.

Landlords who are higher rate taxpayers have also had to contend with a progressive reduction in the amount of mortgage interest relief they can claim, which began in April this year.

Overall lending was anticipated to be £20.1 billion in May, the CML said. Approvals have fallen from 69,000 in January to 65,000 in April, lower than the Bank of England Monetary Policy Committee’s forecast of 71,000 approvals each month for the rest of the year.

First-time buyer numbers were up 8% compared to the previous 12 months, whilst home movers were down 9%, due to the fact movers benefit less from government schemes than first-time buyers. However, the CML said it expects to see a slowdown in the number of first-time buyers over the remainder of this year.

The CML has revised its expectation for buy-to-let lending this year to £35 billion, down from its forecast of £38 billion at the end of 2016.

Mortgage rates are still close to “historic lows”, the CML said, but recent data has shown they are starting to edge up. Those considering buying or remortgaging should therefore act quickly if they find a deal they want.