Remortgaging soars but homebuyer lending subdued – CML

Ryan Bembridge

March 14, 2017

houses bath

Remortgage lending soared in January – increasing in value by 54% from December and 22% year-on-year, Council of Mortgage Lenders figures show.

But homemover and homebuyer activity were more subdued, falling by 54% and 28% from the month before and by 1% and 7% year-on-year.

Paul Smee, director general of the CML, said: “January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector.

One million have used a Help to Buy scheme

“We expect a seasonal dip in activity in the winter months and this appears to be the case in January.

“However, the lull in moving activity appears stubbornly persistent, and we have commissioned research on the reasons why the number of transactions seems in secular decline.”

It was a mixed picture for buy-to-let borrowing, which rose by 11% month-on-month but fell by 16% year-on-year.

Smee added: “Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels.

“This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.”

First-time buyer borrowing fell by 29% month-on-month to £3.6bn but rose by 4% year-on-year.

Adrian Anderson, director of mortgage broker Anderson Harris, said: “The pick-up in first-time buyers, in their highest numbers since the time series began in 2007, is hugely encouraging.

“First-time buyers are the lifeblood of the market and with lenders offering a range of high loan-to-value deals, as well as more innovative products where family members can help offspring onto the ladder, it looks as though this trend will continue.’

Jeremy Duncombe, director, Legal & General Mortgage Club, said: “At a first glance, today’s figures paint a positive picture of our housing market, highlighting the strength and robustness of this vital sector.

“However, it also highlights the higher sums that first time buyers are borrowing to get themselves onto the housing ladder due to the ongoing disparity between house price inflation and wage inflation.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, reckoned the figures demonstrate market resilience.

He said: “Encouragingly, we have noticed a bit of a pick-up in activity over the past few weeks as buyers and sellers seem to be getting on with it as they usually do at this time of year.

“Listings are improving but property must still be very compelling in terms of price, location and presentation – or all three – in order to gain attention from increasingly discerning buyers.”

But Jonathan Sealey, chief executive of Hope Capital, felt the figures were more subdued than expected.

He said: “Remortgages are the only real area of growth in the market with first-time-buyer activity, buoyant at the end of 2016, dropping right off.

“As the government gets closer to triggering Article 50 there will of course be many that want to sit tight to see how the land lies.

“In these situations there are always those that will move to take advantage of a quieter market, so it will be very interesting to see where movement is felt in the next couple of months.

“Affordability is an issue as inflation and continually rising house prices outstrip real wage growth. This is putting more pressure on buyers’ ability to raise adequate deposits. How lenders respond to this will be key.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, expected this subdued start to the year to pick up.

He said: “Remortgaging remains hugely popular as borrowers take advantage of rock-bottom rates. Lenders are keen to lend and this appetite shows no signs of diminishing.

“The dip in activity over the winter months explains why January tends to be a relatively quiet month for the mortgage market.

“These numbers should pick up as we move into spring, as this is usually a busier time of the year for the housing market.”

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