March lending slows except for small increase to first-time buyers

The only uptick in mortgage lending in March was to first-time buyers, according to the latest figures from UK Finance.

Lending to first-time buyers was up by 2% in March to £5.1bn year-on-year although the number of new first-time buyer mortgages completed fell by 1.9% to 31,200.

The rest of the mortgage lending sector saw a lull in March even remortgaging which has been strong in recent months. The £5.6bn of remortgaging in the month was 9.7% down year-on-year while numbers declined by 12% to 32,400.

New lending to homemovers also fell – by value it was down 4.7% to £6.1bn while numbers dropped 7.8% to 28,400.

Separate figures from the Bank of England show that gross mortgage lending in the first quarter of 2018 was £61.1 billion, up 3.4 per cent from £59.0 billion in the first quarter of 2017.

Buy-to-let

Buy-to-let lending continues its downward spiral with 5,500 new buy-to-let mortgages completed in March, down 19.1% on a year earlier. By value this was £0.8bn of lending – a fall of 20%.

There were 12,600 new buy-to-let remortgages completed, up marginally by 0.8% but by value remortgage buy-to-let lending remained unchanged at £2bn.

UK Finance research suggests the recent softening of the buy-to-let market is mostly down to recent tax and regulatory changes including the limiting of landlords’ Mortgage Interest Tax Relief (MITR), the 3% Stamp Duty Land Tax (SDLT) surcharge and new underwriting requirements introduced by the Prudential Regulatory Authority (PRA).

Comment

Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging levels softened in March, after a busier than usual start to the year saw customers locking into attractive deals ahead of a potential interest rate rise.

“There has been relatively flat growth in lending to first-time buyers, reflecting recent Bank of England figures showing a fall in mortgage approvals.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, commented: ‘These figures are interesting because they show a bit of a push-me pull-you market.

‘Remortgaging, which we would have expected to be higher, has fallen whereas new business, which might have been higher, is not so impressive either.

‘However, bearing in mind these numbers are for March so reflect buying decisions made at the end of last year and the beginning of this year, we wouldn’t really expect to see much dramatic change. The market is continuing its steady process without a major correction in sight one way or the other.’

Richard Pike, Phoebus Software sales and marketing director, said: “We have at least another month at the current bank rate, and more than likely for some months to come, which should see remortgage activity rise again as borrowers feel they have more time to take advantage of low rates.”

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