The CML’s data showed that the number of remortgage loans reached 33,100 in January, a rise of 28% month-on-month and 19% compared to a year ago.
The substantial increases in remortgaging resulted in the highest lending borrowed in a single month for remortgaging in the UK since January 2009.
Despite buoyant activity in the remortgage sector, homemover activity was hit by the seasonal lull, with January experiencing the lowest number of house purchase loans advanced since February 2015.
Homemovers borrowed £5.1bn in January, down 24% on December but up 11% compared to a year ago. This totalled 24,800 loans, down 26% month-on-month but up 3% on January 2015.
On a similar note, first-time buyers borrowed £3.3bn in January, down 27% on December but up 14% on January last year. This was the lowest first-time buyer borrowing level since February 2015 but in line with the expected seasonal dip in activity.
However, affordability improved slightly in the first month of this year, with average loan sizes and loan-to-income multiples decreasing compared to December. The proportion of income first-time buyers committed to capital and interest repayments remained at its lowest level since records began in 2005, at 18.2% of income.
Meanwhile, ahead of the deadline for the 3% Stamp Duty hike on 1 April, landlords borrowed £3.7bn in January, rising by 9% on a month earlier and 42% annually. Despite this, the number of purchase loans taken out by investors actually dipped compared to a month earlier to total 9,500, down from 10,300 in December. Remortgaging dominated the number of buy-to-let loans taken out by landlords in January, as 13,400 loans were advanced, up 3% compared to December and 31% on a year earlier. A further 200 buy-to-let loans in January were made up of further advances taken out by investors.
Peter Williams, executive director of IMLA, said it was clear that remortgaging had driven buy-to-let activity in January.
“The impending stamp duty shake-up is a clear incentive for landlords to seek to complete on any new purchases before April, but the 8% monthly drop in buy-to-let purchases in January certainly does not look much like a ‘stampede’ or cause for concern. Either way, these policy changes mean we are in yet another period of adjustment where lending levels are being impacted by a shift from one regime to the next, making it harder to pinpoint what ‘normal’ activity now looks like,” he said.
“What’s certain is that the UK housing market needs a healthy private rental sector to remain beyond April 2016 if it is to respond to population increases and rising tenant demand. With the consultation on buy-to-let lending controls closing tomorrow, it seems premature in the extreme for policymakers to take further action that might ultimately weigh down too heavily on this important part of the market.”
