Lending to first-time buyers in January was at its lowest monthly level in 21 months, by both volume and value. However, it was the second highest January lending level since 2007, behind only last January's levels in both volume and value.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"January saw a bigger dip in lending compared with December than usual, which may partly be down to the flurry of activity at the end of last year to beat the stamp duty changes. Tougher rules introduced by the mortgage market review mean affordability is an issue for many borrowers: while more lenders may be offering higher loan-to-values, actually getting a big-enough mortgage can be more of a challenge, particularly in London and the south-east."
Paul Smee, director general of the CML, commented:
"The traditional beginning of year seasonal lull in lending is slightly more prominent in house purchase lending than in previous years, especially in comparison to the particularly strong levels at the start of 2014. Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months.
"Increases month-on-month in remortgaging, both for home owners and in the buy-to-let market, are welcome given the recent static nature of remortgage activity. Interest rates are looking unlikely to go up in the very near future and the greater availability of good mortgage rates has probably motivated people to look at a change."
Brian Murphy, Head of Lending at Mortgage Advice Bureau, comments:
“Affordability conditions have improved for first-time buyers, with CML data showing that the proportion of income that first-time buyers spend on mortgage payments has fallen this month, making life easier for younger borrowers with less disposable income. The average loan-to-value for first-time borrowers has also risen to 83%, reducing the amount needed for a deposit.
“However, there has also been a significant fall in lending to first-time buyers. January saw a 27% decrease in the volume of lending to these customers, which now lies at its lowest point for 21 months in terms of both volume and value. Although the Help to Buy scheme is propping up higher LTV lending options, more needs to be done to ensure first-time buyers are not barred from the housing market, particularly once the scheme has ended.”
