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Home-owner and buy to let remortgage lending at strongest levels since 2009

Home-owner and buy to let remortgage lending is running at its strongest levels since 2009, while new loans to home-owners fell by 8% in October, according to the latest data.

New figures from the Council of Mortgage Lenders (CML) reveal that on an unadjusted basis, in October home-owners borrowed £10.5bn for house purchases. This figure is down 8% on September and 11% on October last year.

At 57,800, the amount of loans taken out by home-owners was also down, with the figures showing an 8% decrease on September and a 13% decrease on October last year.

The CML found that, at £4.5bn, first-time buyer borrowing was also down. This was an 8% fall month-on-month and a 2% drop year-on-year. First-time buyers took out 28,900 loans, down 8% month-on-month and 4% year-on-year.

Home movers borrowed £5.9bn in October, which was down by 9% on September and 18% compared to a year ago. This equated to 28,900 loans, down 8% month-on-month and 20% on October 2015.

Remortgage activity meanwhile continued to show strength, totaling £6.1bn in October, up 11% month-on-month and 7% year-on-year. This equated to 34,700 loans, up 10% on September and 5% compared to a year earlier.

Landlord borrowing picked also up from September, reaching £3bn, which is an increase of 7% month-on-month, but down 21% year-on-year. This came to 18,600 loans in total, up 2% compared to September but down 25% compared to October 2015. Nearly two thirds of buy to let loans were remortgages rather than house purchases.

Paul Smee, director general of the CML, said:

“Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders are now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.

“Home-owner and buy to let remortgage lending, however, has recovered and is running at its strongest levels since 2009. This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut.”

Steve Olejnik, COO of Mortgages for Business said:

"Certainly the buy to let lending curve has tailed off somewhat but I think that the more professional side of market remains robust with landlords factoring in additional costs. Only time will tell what effect this will have on rents.

"New stress tests in January and stricter underwriting rules for portfolio landlords in October on top of the approaching new income tax relief changes will make 2017 another challenging year. I anticipate that BTL lending next year will be down on 2016 and we will all have to work harder to maintain our piece of the pie.

"Having said that property will remain an attractive investment compared to other asset classes, particularly for landlords who approach investing intelligently."


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