Council of Mortgage Lender figures suggest lending is 8% lower than January’s total of £19.8bn, but this closely matches the £18.1bn lent in February last year.
CML senior economist Mohammad Jamei said: “Mortgage lending is holding up well, but under the surface buyers face mixed fortunes. First-time buyers and customers who are remortgaging are driving total lending, while home movers and buy-to-let remain weak.
“The weakness in home movers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013. This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.”
Remortgaging has grown 20% in the last 12 months and first-time buyer numbers have risen to over 340,000 in the year to January, which are heights last seen in 2008.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Uncertainty over Brexit suggests interest rates are unlikely to rise anytime soon, at least until we have a better idea of what a post-Brexit world would look like. Mortgage rates continue to look competitive and there is plenty to tempt those remortgaging, as well as first-time buyers with some good deals available at high loan-to-values.’
Housing and mortgage markets
The housing market has been slowly building up momentum over the last few months, largely getting back to activity levels we saw in the beginning of 2016 and the CML notes that the MPC expects the market to stay buoyant over the next nine months.
However, only one component of transactions has been growing and that is first-time buyers supported by government housing schemes, low mortgage rates and in all likelihood, falling landlord competition for properties.
Cash transactions have recovered a little too, but only in the last two months and homemovers and buy-to-let house purchases are both down on a year ago with just 5,900 buy-to-let transactions in February.
Yet lending has been fairly stable since April last year, averaging just over £20bn a month driven by strong lending competition.
This strong competition between lenders has encouraged more borrowers to re-finance, following the launch of the Term Funding Scheme and the interest rate cut, both in August, which helped push down offered mortgage rates even further.
For example, bank data confirmed the average quoted rate for a two-year fixed rate mortgage at 75% loan-to-value is currently 1.42%, the lowest it has ever been.
On the upcoming tax relief changes for landlords, the CML said there is still a large degree of uncertainty as to how landlords will react, but noted that a YouGov survey suggests landlords are fairly well informed of the tax changes. However, it said it expects slower or limited growth in landlord portfolios but will be waiting to see how the changes bed in.