First-time buyers borrowed £4.3bn in May, up 10% on April with gross mortgage lending to these borrowers up 23% year-on-year, according to the Council of Mortgage Lender’s (CML) monthly lending figures.
Across the whole market, gross mortgage lending for house purchase was up 8% annually to reach £9.4bn, 15% higher than in April.
Paul Smee, CML director general, said: “For the second month running, first-time buyers borrowed more than home movers, the first time in 20 years that this has been the case. Buy to let continues at lower levels as expected, after the change to stamp duty.
“Brexit, and its likely effect on the market, is a question to which the answer will not immediately be forthcoming. Lenders will continue to be open for business as usual, but lending volumes may be affected by uncertain consumer sentiment.”
Remortgage activity dropped 15% to £5.2bn between April and May, but is still up 30% on last year.
Buy-to-let activity which spiked in March rose 4% month-on-month to £2.6bn, but volumes are also down 4% year-on-year.
Smee said: “There was a sense of the market regaining some equilibrium in May, following the stamp duty driven spike in March and the subsequent dip in April.”
Ian Larkin, co-group CEO of Target Group, said: “It’s pleasing to see that the market regained some balance in May as the huge spike in lending driven by buy-to-let activity in March and the subsequent dip in April has evened out to a steady 8% growth year-on-year. It seems this has been driven largely by lending to first-time buyers. While this is clearly positive news, the really pressing question for lenders now is what next following the Brexit vote?”
Andy Knee, chief executive of LMS, said the Bank of England’s possible move to cut rates to a historic 0.25% this could ensure competitive mortgage rates continue offering consumers the chance to cut household bills.
“However, this is not all good news as lender appetite for risk will be lower in the current economic climate, which could hamper chances for some first-time buyers,” he said.
