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Does December’s drop in purchase lending signal start of slowdown?

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13/02/2018
First-time buyer, home mover and buy-to-let business all fell at the end of last year, as experts predict a 'subdued' 2018
Does December’s drop in purchase lending signal start of slowdown?

Mortgage lending to those buying a property fell in December, according to figures from UK Finance.

It recorded a fall in lending to first-time buyers, home movers and buy-to-let purchasers in December 2017, compared to the previous year.

First-time buyers fall

There were 30,800 new first-time buyer mortgages completed in December, 5.2% fewer than in the same month a year earlier. The £5.1bn of new lending in the month was 1.9% down year-on-year.

The average first-time buyer is now 30 and has an income of £41,000.

Despite the dip, 2017 overall saw the highest number of first-time buyers (365,000) since 2006, at 365,000, 7.4% up on 2016.

Paul Smee, head of mortgages at UK Finance, said: “2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder.

“But although the market remains competitive there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year.”

Fewer home movers

There were 30,700 new home mover mortgages completed in December, some 4.7% fewer than in the same month a year earlier. The £6.5bn of new lending in the month was 3% down year-on-year.

However, the number of homeowners remortgaging to a new deal was up in December. There were 30,500 new homeowner remortgages completed, 7.4% more than in the same month a year earlier. The £5.2bn of remortgaging in the month was 8.3% up year-on-year.

Buy-to-let slump

There were just 5,300 new buy-to-let house purchase mortgages completed in December, 17.2% fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 11.1% down year-on-year.

Buy-to-let remortgage business also fell by volume and value. There were 9,900 new buy-to-let remortgages completed in December, some 11.6% fewer than in the same month a year earlier. By value this was £1.6bn of lending in the month, 11.1% down year-on-year.

Smee admitted: “We are seeing a less buoyant buy-to-let market, which continues to be impacted by recent tax and regulatory changes. This will continue to flatten gross lending volumes this year.”

Graham Toy, CEO of the National Association of Commercial Finance Brokers, agreed: “The buy-to-let market is now showing more modest signs of growth due to recent tax changes as landlords’ appetite to add to their portfolio using finance is lower.

“While we have to take the seasonal slowdown into account, the signs point to all mortgage lending in 2018 being somewhat subdued.”

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