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Remortgaging props up market as mortgage lending plummeted in July

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  • 14/09/2016
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Remortgaging props up market as mortgage lending plummeted in July
Mortgage lending to home buyers took a nosedive in the month following the EU referendum, as homeowners borrowed 13% less in July.

The latest monthly lending figures published by the Council of Mortgage Lenders (CML), showed that homeowners borrowed a total of £10.6bn in July, 12% lower than the same time a year earlier and 13% down on June. During the same month, 58,100 loans were advanced to these customers, a similar decrease of 14% compared to June.

Richard Pike, Phoebus Software sales and marketing director, said: “The figures confirmed today by the CML are most telling when you look at them compared to July last year. Month-on-month, given the uncertainty caused by the EU referendum result, it was almost to be expected that things were more subdued.

“However, the market was looking good before the vote so we now have to consider whether the result itself has had a genuine effect on appetite and that it’s not just a seasonal dip, which we experience every year.”

The remortgaging sector was credited with propping up the purchase market as both lending to first-time buyers and homemovers suffered dramatically. Despite the number of loans to fledgling buyers increasing on an annual basis, the value of mortgages completed fell by 19% compared to June at £4.4bn, while lending to homemovers decreased by 9% to £6.2bn.

Remortgage activity totalled £6bn in July, climbing by 7% month-on-month and 20% compared to a year ago.

The buy-to-let market continued to readjust following the 3% increase to Stamp Duty on second homes introduced in April. While gross mortgage lending to landlords was 21% lower than last year at £3bn, July saw the highest levels of activity by volume and value since the tax changes were introduced.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “There appears to have been an immediate nervousness following the referendum and clearly a pause before taking action. The more interesting figures will come in the next month or two when we see whether or not people decided to proceed with their purchases or put them on hold.

“It is understandable that people have been taking longer to commit to a decision as big as buying a home. That is only natural – the referendum result was a huge earthquake and it is not unreasonable for people to pause and reflect on how it will affect their lives.”

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