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April mortgage figures show lending drop – CML

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  • 13/06/2017
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April mortgage figures show lending drop – CML
Mortgage lending fell in April, the Council of Mortgage Lenders (CML) has said.

Its latest figures show borrowing of £9.6bn in April, down 14% on March. The figure is 19% higher than April last year, however changes to stamp duty in 2016 have distorted comparisons.

There were 51,200 loans made in April, down 16% on March. First-time buyers accounted for £4.1bn, down 16% on March. Meanwhile, home movers borrowed £5.5bn, 11% lower than in March.

Home-owner remortgage activity was also down 16% by value and 18% by volume on March. In addition, gross buy-to-let also saw month-on-month decreases, down 17% by value and 16% by volume.

However, the CML said if the figures are seasonally adjusted, first-time buyers and home movers went up by value and remained relatively unchanged by volume compared to March. Buy-to-let and remortgage activity also remained relatively unchanged in April from March.

 

Seasonally unchanged

Paul Smee (pictured), director general of the CML, said: “April comparisons are distorted by the weakness last year following the stamp duty changes, and the normal seasonal lending surge in March. But the seasonally-adjusted picture shows lending relatively unchanged month-on-month across all lending segments.”

He added: “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.”

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

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

 

Buy to let

Buy-to-let activity was driven by remortgage lending, which accounted for over two thirds of total lending. The number of loans for buy-to-let house purchase advanced in April remained low compared to activity seen before the change on stamp duty on second properties introduced in April last year.

Jeremy Duncombe, director of the Legal & General Mortgage Club, said the snap general election had not damaged the market.

“Appetite for lending to first-time buyers remains resilient, as does the demand from these borrowers to get onto the housing ladder. A combination of low interest rates and a determination to make the most of the current record-low deals available has seen this group of buyers benefit.

“The mortgage market is extremely robust and has the tendency to be able to weather geo-political storms.”

However, Duncombe added that the reliance on parents helping children onto the property ladder was not a sustainable solution to affordability.

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