House purchase lending saw a 5% month-on-month increase in November, according to new figures.
The latest report from the Council of Mortgage Lenders (CML), reveals that home-owners borrowed £11bn in November for house purchases. This is a 5% increase on October 2016 and a 2% increase year-on-year, equating to 60,800 loans - up 5% on October and 0.2% on November 2015.
First-time buyer borrowing also saw an increase, with fledging home buyers borrowing £4.7bn, up 4% on month-month and 9% on November last year. They took out 30,100 loans, up 5% on October and 8% on November 2015. The CML’s affordability metrics saw the typical first-time buyer loan increase from £133,400 in October to £134,200 in November.
Home movers borrowed £6.3bn, an increase of 7% month-on-month but a drop of 5% on November last year. Home movers took out 30,700 loans, a monthly rise of 6% but a yearly decline of 6%.
The greatest yearly rise was seen in remortgage activity, which totaled £5.8bn, and while down 5% on October, was up 14% on November last year. This represented 34,700 loans, remaining unchanged month-on-month, but rising 13% on a yearly basis.
As for landlords, their borrowing totaled £3.2bn, which was the highest monthly level since the stamp duty changes on second properties came into effect in April. Borrowing therefore rose by 10% month-on-month but fell 9% year-on-year.
In total landlords took out 21,000 loans, up 13% compared to October but down 10% compared to November 2015. Over two thirds of buy-to-let loans were remortgages rather than house purchase.
Paul Smee, director general of the CML, said:
“November lending reflected stable market conditions. Overall, 2016 did not match recent years in terms of house purchase lending growth, but lending remained resilient through regulatory and political change and aspirations for home-ownership remain strong in the UK. Our forecasts for 2017 may be less bullish than a year ago, as economic uncertainty weighs on the market, but we still predict 1.2m transactions and a slight increase in gross lending to £248bn.
“Buy-to-let lending, driven by remortgage activity, saw its strongest monthly lending level since the stamp duty changes on second properties introduced last April. Despite this, we expect buy-to-let lending levels in both 2016 and 2017 to prove lower than their 2015 recent peak as further tax changes take effect.”
Steve Olejnik, COO, said:
“The CML’s data shows that November saw the highest level of gross buy to let lending since the changes to stamp duty in April. Part of this will have been driven by growing landlord confidence, as investors continue to come to terms with the changes and factor them into their planning. Many investors will have also wanted to beat the PRA’s changes to buy to let affordability checks, which came into force on 1st January, as well as the changes to income tax relief on finance costs.
“We predict that gross buy to let lending will dip by around 13% in December, due to a seasonal slowdown, which will equate to about £2.8bn of lending for the month. This will put gross lending on track to reach the £40bn mark for 2016 – which is in line with our initial prediction for the year. We expect that 2017’s total will be slightly lower than 2016, but not by a significant amount.
“While the regulatory changes to property investment are challenging, the property 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.”
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