Purchase lending down 8% as remortgaging soars: CML
With lenders now tightening affordability criteria ahead of the PRA’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.
Purchase lending to home-buyers fell by 8% month-on-month in October, and remains 11% lower than October 2015, according to the latest CML statistics.
First-time buyers borrowed £4.5bn, also down 8% on September and down by 2% on October last year. This equated to 28,900 loans, down 8% month-on-month and 4% year-on-year.
Home mover lending fell by 9% in value and 8% in volume month-on-month. Compared to October 2015, the number of loans is down by 20%.
However remortgage activity totalled £6.1bn, up 11% on September and 7% annually to its strongest levels since 2009.
Landlords borrowed £3bn, up 7% month-on-month but down 21% year-on-year.
Paul Smee, director general of the CML, commented: "Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.
"Home-owner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009. This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut."