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Strong first-time buyer business holds mortgage market steady

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
16/06/2017

First-time buyers borrowed £4.1bn in April, which was down a notable 16% on March but up 8% on the previous year, said lender trade body The Council of Mortgage Lenders.

Meanwhile, home movers borrowed £5.5bn, down 11% on March but up a large 28% year-on-year.

Distorted figures

The figures are skewed by lending volumes a year ago when the buy-to-let Stamp Duty changes came into force, causing lending to spike in March. As a result year-on-year comparisons are distorted but the overall picture is one of a steady mortgage market.

Homeowner remortgage activity was down 16% by value and 18% by volume on March. Compared to a year ago, remortgage lending was down 15% by value and 16% by volume. Buy-to-let saw month-on-month decreases, down 17% by value and 16% by volume.

Paul Smee, director general of the CML, commented: “Heading into the summer months, we expect the market to remain slightly lopsided. Buy-to-let and home movers may well remain subdued, as they have been for the last six months. But both first-time buyer and remortgage lending should maintain momentum on the coattails of the attractive deals available.” 

Alastair McKee, managing director of mortgage broker, One 77 Mortgages, said: “The market is less lopsided than one-sided. Against a backdrop of cheap loans, Help to Buy and significantly reduced competition from landlords, first-time buyers are having a field day. 
 
“With many landlords still reeling from the raft of tax and stress-testing changes, first-time buyers see an opportunity and are taking it.”

Affordable mortgages

The proportion of household income used to cover mortgages continued to be near historic lows in April for both first-time buyers and home movers at 17.3% and 17.5% respectively.

The typical first-time buyer loan size increased from £133,500 in March to £136,500 in April while the average household income increased to £40,700 from £40,000. This meant the income multiple went from 3.53 to 3.57.

The average amount borrowed by home movers in the UK increased to £176,500 from £172,400 the previous month, while the average home mover household income increased month-on-month from £54,100 to £55,200.