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Buy-to-let lending for purchases down 22% over the last year

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Landlords are holding back but confidence is stronger from homebuyers
Buy-to-let lending for purchases down 22% over the last year

Buy-to-let lending slumped in May, with a marked fall in the value of lending for buy-to-let purchases to just £0.7bn, according to the latest figures from UK Finance.

This was 22.2% down year on year, said the trade body, while the number of new buy-to-let purchase mortgages completed in the month fell 9.8% to 5,500.

Remortgaging by landlords was much stronger. There were 14,600 new buy-to-let remortgages completed in the month, some 15% more than in the same month a year earlier. By value this was £2.3bn of lending in the month, 21.1% more year-on-year.

Pre-summer boost

There were 32,200 new first-time buyer mortgages completed in May, 8.1% more than in the same month a year earlier. The £5.4bn of new lending in the month was 12.5% more year-on-year.

There were 31,100 new homemover mortgages completed in the month, up 4.4% over the year.

There were 36,000 new homeowner remortgages completed in the month, some 7.1% more than in the same month a year earlier. The £6.3bn of remortgaging in the month was 6.8% more year-on-year.

Jackie Bennett, director of mortgages at UK Finance, said: “The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong remortgaging activity. It is also particularly encouraging to see an increase in homemovers, after a period of relative sluggishness in this important segment of the market.

“However, affordability remains a challenge for some prospective buyers and this is reflected by a gradual increase in loan to income multiples.

“Meanwhile purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”

Jonathan Samuels, CEO of Octane Capital, added: “May’s lending data is a perfect snapshot of the sea change in the property market in recent years.

“First time buyers are in the ascendancy while amateur landlords are beating a fast retreat. What activity there is within buy-to-let is primarily the remortgaging of existing portfolios or properties in order to maintain some kind of margin.

“While professional landlords and institutional investors remain active, amateur landlords are fast becoming an anachronism.”

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