Home buyer activity falls in April

New lending figures released by the Council of Mortgage Lenders (CML) reveal that mortgage lending fell in April, on a non-seasonally adjusted basis, but has risen on year-on-year.

According to the CML, home buyers borrowed £9.6bn in April. This is 14% lower than March’s figures, but up 19% on April 2016. However, the CML has highlighted that April comparisons are ‘distorted by the weakness last year following the stamp duty changes, and the normal seasonal lending surge in March.’

In terms of volume, overall this came to 51,200 loans, down 16% on March but a rise of 9% on April 2016.

First-time buyers took out 25,400 loans, an 18% monthly drop, but a 2% yearly rise. This represented £4.1bn, down 16% on March but up 8% on April 2016.

Homemovers, meanwhile, borrowed £5.5bn, down 11% on March but up 28% year-on-year. This came to 25,700 loans, a 15% drop on March’s figures but a 17% rise on April 2016.

Home-owner remortgage activity was down both by value and volume on a monthly and annual basis and while gross buy to let borrowing fell by volume and value on a monthly basis, compared to April 2016 lending remained unchanged and the number of loans increased by 1%.

Paul Smee, director general of the CML, commented: “April comparisons are distorted by the weakness last year following the stamp duty changes, and the normal seasonal lending surge in March. But the seasonally-adjusted picture shows lending relatively unchanged month-on-month across all lending segments.

“Heading into the summer months, we expect the market to remain slightly lopsided. Buy-to-let and home movers may well remain subdued, as they have been for the last six months. But both first-time buyer and remortgage lending should maintain momentum on the coattails of the attractive deals available.”

The CML reports that the proportion of household income used to service capital and interest rates is currently at ‘near historic lows’ both for first-time buyers and home movers. First-time buyers borrowed marginally more in April (£136,500) compared to March (£133,500) and the average household income rose to £40,700 from £40,000, taking the average income multiple to 3.57.

As for home movers, the average amount borrowed rose to £176,500 from £172,400 and the average income was recorded as being £55,200, taking the income multiple for the average home mover to 3.35.

As for buy to let lending, remortgage activity accounted for two-thirds of all buy to let lending in April and the number of loans advanced remained low when compared to activity in this market prior to the introduction of the stamp duty surcharge in April 2016.

Stating that the snap general election had not had a detrimental effect on the market, Jeremy Duncombe, director of the Legal & General Mortgage Club, said: “Appetite for lending to first-time buyers remains resilient, as does the demand from these borrowers to get onto the housing ladder. A combination of low interest rates and a determination to make the most of the current record-low deals available has seen this group of buyers benefit.

“The mortgage market is extremely robust and has the tendency to be able to weather geo-political storms.”

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