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First-time buyers drive house purchase lending in June – CML

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  • 10/08/2016
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First-time buyers drive house purchase lending in June – CML
Lending to first-time buyers surged in June to £5.5bn up 25% year-on-year and almost 30% higher than May's lending figures, as experts said fledgling buyers moved to take advantage of record-low mortgage rates.

Some 34,300 loans were taken out by borrowers purchasing their first home in June, up by 24% on a month earlier and 17% higher than in June 2015, the Council of Mortgage Lenders (CML) monthly lending figures show. First-time buyer lending has now driven activity in the house purchase market for the third month in a row.

Overall, homeowners borrowed £12.3bn in June, a 29% rise compared to May and 12% on the same time last year. Homemovers borrowed £6.9bn, up 33% on May and up 5% compared to a year ago.

Despite the CML’s strong lending figures, Paul Smee, director general of the CML, pointed out that the market would take some time to show the full effect of the EU Referendum result, with the latest figures predominantly covering the period prior to the vote.

“We still believe that the mortgage market is well capitalised, resilient and open for business, and will remain so for the foreseeable future,” he said.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said the figures offered a glimmer of hope for first-time buyers.

“Although these figures are a little historic reflecting the mood music prior to the referendum, they do show that the former Chancellor’s aspiration to level the playing field between first-time buyers and buy-to-let investors has borne fruit as they take advantage of record low mortgage rates.

“However, since the referendum we have found that the softening in prices and general uncertainty has encouraged more landlords back into the market so it remains to be seen whether first-time buyers can still compete,” he added.

While remortgage activity continued to rise by 8% on May and 6% compared to a year ago to £5.6bn, the amount of loans at 32,4000 dropped 2% on the same month in 2015.

Buy-to-let lending picked up in June, as landlords borrowed £2.9bn, 12% higher than in May. However, lending failed to keep pace on an annual basis with taxation changes to the sector taking its toll, as activity dropped 15%.

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