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Landlord borrowing falls by 65% as lull hits market in April

  • 15/06/2016
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Landlord borrowing falls by 65% as lull hits market in April
There was a slowdown in activity in the mortgage market in April, mainly due to the anticipated lull following the rush to beat the Stamp Duty surcharge on second homes, hitting landlord borrowing the hardest.

The level of buy-to-let borrowing was down 65% between March and April according to the seasonally adjusted monthly figures compiled by the Council of Mortgage Lenders (CML). The data showed that buy-to-let borrowing also fell on an annual basis, dropping 7% year-on-year to £2.5bn with the number of loans dropping 64% from March to 16,100 and representing a decline of 10% on April 2015.

Homeowner borrowing for house purchase was down 40% between March and April to £8.1bn for the month, a drop of 4% since April last year. This was made up of 47,300 loans, down 31% on March and 5% on April 2015.

There was also a monthly decline in first-time buyer borrowing, down 11% on March to £3.5bn but up 15% on April last year. This equated to 25,100 loans, down 9% month-on-month but up 7% in the year.

The CML said the typical loan size taken out by first-time buyers decreased to £130,000 from £133,000 last month, offset by the household income of borrowers also decreasing slightly from £40,600 in March to £39,700 in April, which meant the income multiple stayed the same at 3.46.

Homemovers borrowed £4.3bn, down 53% on March and a fall of 14% from a year ago. This represented 22,200 loans, down 46% month-on-month and 15% on April 2015 and the average amount borrowed decreased to £162,995 from £180,000 in March.

Paul Smee, director general of the CML, said the figures represented the “calm after the storm as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property Stamp Duty deadline”.

“We expect the market to take several months to return to its previous levels after the lending surge,” he said.

Remortgage activity was the only form of lending to rise on both a monthly and yearly basis, up 25% in April compared to March and increasing 40% in the year. This was made up of 34,800 loans, up 23% month-on-month and 30% in the year.

The average age of a first-time buyer in April was 30 years old, while the median for homemovers was 39.

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