During Q1, first-time buyer activity at Connells Mortgage Services saw steep increases every month, growing by 126% and 112% on a quarterly and yearly basis.
Amid an investor rush to beat higher Stamp Duty rates on second homes from 1 April, buy-to-let purchase activity also swelled by 122% on Q4 2015 and 106% compared to a year earlier.
Remortgaging had the smallest quarterly growth at 89%, but contributed the largest annual rise of 162%, with activity seeing a sharp jump in the first month of 2016, before stabilising during February and March.
Deals through homemovers also saw steep rises, growing by 132% between Q4 2015 and Q1 2016 and by 107% on an annual basis.
Group chief executive David Livesey, said the mortgage market had “sprung back to life” in the first quarter.
“Homemovers and first-time buyers are seeking to take advantage of the low interest rate, high-LTV [loan-to-value] lending environment. The biggest story from the sector this quarter is the impact that the 3% Stamp Duty levy on second homes has had on the buy-to-let market. Certainly, there has been a pronounced short-term trend created by the artificial deadline,” he added.
“However, this is not a sign that investors have lost confidence in the post-April 1st buy-to-let market, more a short term trend as they simply sought to avoid an unnecessary upfront cost. Indeed, over the long-term, the sector is more than capable of riding out the increased levy given its strong fundamentals – namely, high yields, high rental demand and accessible mortgage lending.”
Connells also recorded an uptick in average mortgage values, with mortgage terms holding steady at already relatively high rates.
Mortgage values averaged £142,433 in the first quarter, a rise of 3% on the final quarter of 2015 and up 7% on year earlier. Meanwhile, the group’s average mortgage term of 25.8 months was down 1% on a quarterly basis but up 1% annually.
Adrian Scott, group mortgage services director, said stability in the length of mortgage terms suggested increased lender confidence in their own liquidity and the economic climate.
“This lender confidence matches the customer need resulting from their increased affordability challenges due to higher loans sizes,” he said.
