Home-owner house purchase lending down 40% in April

New industry figures point to the ‘calm after the storm’, as home-owner house purchase lending dropped in April, following the significant rise in activity in March, as borrowers looked to beat the second property stamp duty deadline.

Home-owners borrowed £8.1bn for house purchase in April, down 40% month-on-month and 4% year-on-year, new data from the Council of Mortgage Lenders (CML) reveals.

Overall, they took out 47,300 loans, down 31% on March and 5% on April 2015.

Home mover activity also saw a large dip in lending figures, dropping 53% from March and 14% compared to a year ago. The total amount borrowed by home movers was £4.3bn, representing 22,000 loans, down 46% month on month and 30% compared to last year.

While first-time buyer lending was down 11% on March, it rose 15% year on year, as first-time buyers borrowed £3.9bn. This equated to 25,100 loans, dropping 9% month on month, but up 7% year on year.

Remortgage lending was the only type to show both year on year and month on month increases in April. Totaling £6bn, it was up 25% on March and 40% compared to April 2015. This equated to 34,800 loans.

As expected, the fall in lending was especially evident for buy to let. Landlords borrowed £2.5bn, down 65% month on month, although the year on year drop was less dramatic at 7% . This came to 16,100 loans in total, down 64% compared to March and down 10% compared to April 2015.

Paul Smee, director general of the CML, commented:

“There is a sense of calm after the storm this month, as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property stamp duty deadline. We expect the market to take several months to return to its previous levels after the lending surge.”

David Whittaker, managing director, Mortgages for Business, added:

“A quieter April for the mortgage market was always on the cards given the effects of the stamp duty surcharge. The potential cost to investors of delaying completion was enormous, resulting in a front-loaded first quarter for buy-to-let transactions.

“Despite this, lending to investors in April was not significantly down on a year earlier – which is testament to the excellent returns available on property in spite of the new stamp duty regime. Lending to other areas of the mortgage market also experienced a slowdown in April, illustrating that the buy-to-let market was broadly on-trend.

“As landlords come to terms with the new normal, the buy-to-let market will begin to heat up again – driven by growing demand for rental accommodation. Property remains an excellent investment as long as landlords factor the additional stamp duty charge into their financial planning. Investment strategies should also take into account the changes to landlords’ tax relief, which are looming on the horizon.”


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