"These figures are actually surprisingly good coming hot on the heels of yesterday’s house-price numbers"
Paul Smee, director general of the CML, commented: “Comparing this March to last year is misleading because of the peak in activity before the stamp duty changes last Spring. Overall, lending trends have remained reasonably consistent. The relatively sluggish activity among home-movers stands in contrast to the growth in first-time buyer and remortgage activity, but in aggregate the market is showing broadly the levels of activity we expected. As we head into the summer, we expect a continuation of these trends, with both first-time buyer and remortgage lending expected to maintain momentum in the light of the very attractive deals currently available.”
Home-owner house purchase and remortgage lending
First-time buyer and home mover activity came out of the winter seasonal dip this month with the highest monthly volumes of the year so far. While home movers decreased year-on-year compared to March 2016, more loans were advanced to first-time buyers this year than in any month of March period since 2007.
On a quarterly basis, house purchase activity was at its weakest for two years since the first quarter of 2015. By contrast, the number of remortgage loans advanced to borrowers was at its highest since the first quarter of 2009.
The proportion of household income used to service capital and interest rates continued to be near historic lows in March for both first-time buyers and home movers at 17.2% and 17.5% respectively.
Affordability metrics for first-time buyers saw the typical loan size increase slightly from £132,200 in February to £133,500 in March. The average household income remained the same month-on-month at £40,000. This meant the income multiple went from 3.54 to 3.53.
The average amount borrowed by home movers in the UK decreased to £172,000 from £176,000 the previous month, while the average home mover household income decreased slightly month-on-month from £55,000 to £54,100. The income multiple for the average home mover was unchanged at 3.34.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: "These figures are actually surprisingly good coming hot on the heels of yesterday’s house-price numbers. Although a little historic, they do show that realistic buyers and sellers are getting on with their business as numbers are up quite a bit compared with the previous month and only down 12 per cent on last year’s figures at a time when the market was particularly active as people were trying to beat the 3 per cent stamp duty surcharge.
Putting these and other figures into perspective, we are finding on the ground that those prepared to be realistic are buying whereas those who have not yet come to terms with changing market conditions are staying put."
Jonathan Harris, director of mortgage broker Anderson Harris, said: "As one would expect, March was a better month for the housing market than February as we move into traditionally what is a busier time of year. The CML rightly points out that to compare this March with last year’s is misleading because there was a strong impetus to buy last year ahead of the introduction of higher stamp duty for landlords and second homeowners from April.
First-time buyer numbers continue to grow as the Bank of Mum and Dad step up to the plate, while lenders also offer competitive pricing at higher loan-to-values. Remortgaging remains popular as borrowers take advantage of cheap mortgage deals and lenders’ willingness to attract new business. This trend is expected to continue well into the summer."
Richard Pike, Phoebus Software sales and marketing director, had this to say: “We would normally be looking at the mortgage lending figures with an eye on the future; what do the current trends indicate might happen in the coming months? However, as a country we are in something of an economic flux with the general election just a couple of weeks away. The figures for March show a steady market, but how that will change when we see the figures for April and May is up for debate.
Generally speaking, it would take a huge drop in confidence for the appetite to go out of the market when rates are as tempting as they are at the moment. The opportunities are still there for the remortgage sector, so perhaps we will see a continuing steady picture. However, a lot could change depending on the outcome after the vote on 8th June and Brexit negotiations become the focus once again.”
Steve Olejnik, chief operating officer of Mortgages for Business said: “As expected, lending to landlords has slowed. This was the government’s aim and means that over the last 12 months buy to let lending by volume has dropped back to just 15% of all mortgage lending. This is a much healthier proportion of the total market and hopefully, will put a stop to the introduction of any further measures to curb buy to let, until we have had time to fully consider the new fiscal and regulatory environment being imposed on landlords.”
