Tue, 14 Jul 15
Buy-to-let lending in the UK continues to climb, while lending to first time buyers and home movers stalls.
Overall lending levels recovered in May compared to April, according to the Council of Mortgage Lenders, but were down year-on-year. Indeed, lending to first time buyers improved month-month, as did lending to home moves. Both, though, remain lower than the same month a year ago. Remortgage activity fell on a both a monthly and annual basis.
The only sector to see lending rise was the buy-to-let market, with lending to landlords growing both month-on-month and year-on-year, largely thanks to remortgage activity.
The value of home-owner loans for house purchase accounted for 53 per cent of gross lending, while remortgage activity accounted for 23 per cent. Home-owner loans as a share of gross lending has increased since the new year, while remortgage activity has edged down
Competitive mortgage rates mean first-time buyers are paying a record low proportion of their monthly income to service the capital and interest rate payments of their mortgage. This is the lowest level since the CML began tracking this in 2005.
Nonetheless, though, gross lending for buy-to-let remains the strongest sector, with mortgages up slightly from April 2015 and higher than May 2014.
"The market might be waking up after a subdued first quarter," comments Paul Smee, director general of the CML.
"Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction."
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