Home-owner house purchase lending at highest level since 2007

Home-owner house purchase lending has risen 21% since February 2015 and is at its highest level since 2007, new data reveals.

New figures from the Council of Mortgage Lenders (CML) reveal that, on an unadjusted basis, home-owners borrowed £8.7bn for house purchases in February this year, which equates to a 4% month-on-month increase and a 21% year-on-year increase.

The number of loans taken out also reflects this trend, with 48,000 loans having been approved: up 4% on January and 12% up on February 2015.

First-time buyers borrowed £3.4bn, up 3% on January and 21% on February 2015.

The CML recorded 22,000 first-time buyer mortgages, an increase of 3% month-on-month and 11% year-on-year.

The average loan size for this demographic was £129,000.

Home movers, meanwhile, borrowed £5.3bn; an increase of 4% on January and 20% on February 2015.

This totaled 26,000 loans, rising by 4% month-on-month and 14% year-on-year.

CML’s research also found that, at 18.1%, home movers are paying nearly record low proportions of income to service capital and interest repayments.

Remortgage borrowing came to £4.8bn, down 17% on January but up 37% on February 2015. Despite the month-on-month decline, this is the most amount borrowed for remortgage in the month of February since February 2009.

Remortgagors took out 28,400 loans, down 15% on last month but up 24% compared to last year.

There was no change to the amount borrowed by landlords month-on-month, however there was a 61% rise year-on-year as landlords took out £3.7bn in mortgages.

This came to 23,700 loans in total, up 1% compared to January and 47% compared to February 2015.

Remortgaging continues to drive the growth in the buy-to-let sector, with 59% of gross buy to let lending being remortgage, compared to just 27% in the home-owner space.

Paul Smee, director general of the CML, commented:

“In 2016, there have been substantial increases in house purchase and remortgage activity year-on-year.

This reflects the sluggish market in early 2015, perhaps driven by election uncertainties. Buy-to-let has also seen substantial year-on-year increases, with particularly strong growth in remortgaging, a pattern which we have seen in the buy-to-let sector the past six months.

Activity has been boosted by landlords seeking to complete purchases before tax changes in April. We do not expect activity to show such strong year-on-year growth later in the year.”

Commenting on the report, David Whittaker, managing director of Mortgages for Business said: 

"The dramatic increase in buy to let purchases in February comes as no surprise to us and we would expect March to demonstrate a similar uplift as borrowers raced to get their deals completed before the 3% stamp duty surcharge kicked in. For our part, we managed to get most cases over the line in time, saving our landlord clients thousands of pounds. Remortgages too, exhibited similar growth in value compared to a year ago.

Over the next few months, I am expecting the buy to let market to quieten down somewhat as landlords take time to factor in the cost of the new stamp duty levy and perhaps more importantly, work out new investment strategies to manage the forthcoming relief restrictions being imposed on individual higher rate tax payers. In this regard, we are already seeing considerable numbers of landlords moving their properties into corporate structures and whilst this can be a costly exercise now, going forward it should make their investments work better in future.

I also expect that remortgaging activity will continue to drive growth in the mortgage market, as increasing numbers of people opt to use their first homes as a means of securing a second home for investment purposes."