Mortgage market remained adaptable and resilient in 2016, says CML

The latest lending figures reveal a mixed picture in December, says the Council of Mortgage Lenders (CML), but first-time buyer lending stayed healthy.

Following a year of regulatory and political change, the CML has released its latest lending figures for 2016, publishing a review of the mortgage market from a monthly, quarterly and yearly basis.

Lending in December
According to the CML’s latest figures home-owner house purchase lending came to £11.6bn, showing an increase of 5% on November and 3% on December 2015. This totaled 63,600 loans, up 5% on November and 0.2% on December 2015.

First-time buyer lending was also on the up in December, reaching £5.1bn – a rise of 9% on November and 13% on December 2015. This came to 32,000 loans, up 7% on November and 8% on December 2015.

Lending to home-movers was up 3% month-on-month but down 3% year-on-year, coming to £6.5bn. This represented 31,600 loans, up 3% on November but down 7% on December 2015.

Gross buy to let was down month-on-month: 15% by volume and 7% by value. Compared to December 2015, the number of loans decreased 21% and the value of these loans also decreased 18%.

Fourth quarter lending in 2016
In the last quarter of 2016 home-owner house purchase lending fell to £33.1bn, down 3% on the third quarter and 2% on the fourth quarter of 2015. This came to 182,000 loans; a decrease of 2% on the previous quarter and 4% on the last quarter of 2015.

As for first-time buyers, lending in the fourth quarter was recorded at £14.3bn for house purchase. This was down 1% by volume and value on the previous quarter and up 4% by volume and 7% by value year-on-year.

Home mover lending was down 6% quarter-on-quarter and 9% year-on-year, coming in at £18.7bn. This came to 91,300 loans, which was down by 4% on the third quarter 2016 and 11% compared to the fourth quarter 2015.

While down 5% on the previous quarter, home-owner remortgage activity came in at £16.6bn, which was up 10% on the fourth quarter 2015. The number of remortgage loans came to 97,500, down 3% on the third quarter but up 9% on the same quarter in 2015.

Gross buy to let lending saw a decline, falling by 2% on the previous quarter and 3% on the same quarter in 2015, coming to £6bn. This represented 57,400 loans, up 2% quarter-on-quarter but down 20% year-on-year.

Lending in 2016
Overall in 2016, home buyers borrowed £127.7bn, which was up by 7% on 2015. They took out 698,900 loans, which was a 3% rise on 2015.

According to the CML first-time buyers borrowed more in 2016 then any other year since its records began. They took out 338,900 loans (up 8% on 2015), which totaled £52.2bn, an increase of 13% on 2015.

Meanwhile, home movers borrowed a total of £74.3bn, up 3% on 2015. This came to 360,300 loans, down 2% on 2015.

As for home-owner remortgage activity, compared to 2015, this saw a 14% rise by volume and a 20% rise by value. The CML also reported that the number of remortgage loans was at its highest since 2009.

Gross buy to let lending decreased to £6bn in 2016, down 2% on the previous quarter and 3% on the same quarter in 2015. This totalled 57,400 loans, up 2% quarter-on-quarter but down 20% year-on-year.

Paul Smee, director general of the CML, said:

“2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable. Home-owner house purchase lending increased, though the buy-to-let sector's positive lending performance has been driven primarily by remortgaging. We do not expect the market volumes to show a year-on-year increase in 2017, instead it will remain similar to that achieved in 2016.”

Steve Olejnik, Chief Operating Officer of Mortgages for Business added:

“We originally anticipated a dip of 13% in gross buy to let lending in December, and it seems that the seasonal slowdown has been slightly more pronounced than we expected, with lending falling 15%. In total, gross buy to let lending reached £40bn for the year, which is in line with what we predicted at the start of 2016.

“2017 is likely to be a slower year for buy to let lending than 2016. We expect the total level of gross lending to fall slightly below £40bn, and it will make up a smaller proportion of overall lending than it currently does. At the moment, buy to let lending has a 17.1% share of the total lending, and we believe that its natural, sustainable level stands at around the 15% mark. Over the next few years, we should see the market rebalance towards this, which will have been driven by successive policy changes.

“While the regulatory changes to property investment are challenging, the market will continue to offer strong returns to those who take an intelligent and level-headed approach to their portfolios. Landlords need to factor the forthcoming tax changes into their financial planning, and should always consult with a professional tax adviser before committing themselves to the market.”

 

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