"The result is a slight tail-off mid-year, as homebuyers pause for thought and lenders are gifted more time to investigate the potential of offering additional mortgage choices."
- e.surv
May saw 65,113 house purchase approvals (seasonally adjusted), down 1.7% from 66,250 the previous month.
It follows monthly declines seen in April (-5.8%) and March (-3.0%) meaning volumes have fallen 10.5% over the last three months. e.surv believes that political uncertainty ahead of June’s upcoming EU Referendum may be causing caution amongst both lenders and borrowers.
The recent falls represent a marked turnaround from the peak in lending seen at the start of the year. January and February both saw strong numbers of house purchase approvals granted (73,060 and 72,512 per month respectively) as buy-to-let landlords and second homebuyers pushed through purchases ahead of the stamp duty changes in April.
On an annual basis however, house purchase lending rose marginally in May, by 0.8%.
The proportion of small-deposit lending also dropped slightly in May, to comprise 18.4% of total home lending – down from 19.1% the previous month. Meanwhile, lending to large-deposit buyers, those with a deposit of 60% or more, picked up significantly and now makes up almost a third (30.7%) of all borrowing.
Richard Sexton, director of e.surv chartered surveyors, commented: “Lenders may need to navigate choppier waters over the next couple of months, but for now the mortgage market remains on an even keel. Homebuyers have more options than ever as lenders work to expand their range of mortgage options further. New mortgages with longer repayment terms and innovative intergenerational mortgages are offering financial buoyancy aids for buyers.
“But the EU referendum is causing some nervousness within financial circles and bringing new unknowns with it. This political milestone could impact the UK’s economic outlook and slowing growth could pose problems of its own for both lenders and borrowers. Juggling these challenges will be key to maintaining the current health of the mortgage market and lenders should brace themselves for possible surprises.
“Faced with this uncertainty, it’s perhaps no surprise that home lending levels are falling slightly. The result is a slight tail-off mid-year, as homebuyers pause for thought and lenders are gifted more time to investigate the potential of offering additional mortgage choices. A lull in buy-to-let lending following April’s stamp duty changes has also added to this calming in the market.”
