The latest CML figures estimate that gross mortgage lending reached £18.4bn in April. This is 11% lower than March’s lending total of £20.7bn, but 4% higher than the £17.7bn lent in April last year.
Since the Stamp Duty change for second properties at that point, first-time buyer numbers are the only component of transactions that has grown consistently. This is in contrast to late 2015 and early 2016 when all transactions were growing.
A year after the Stamp Duty change on second properties, the number of loans for buy-to-let house purchase has halved. This means house purchase activity in the buy-to-let sector now accounts for just under a third of all buy-to-let lending, whereas before the change it accounted for over 40%.
CML senior economist Mohammad Jamei said: “First-time buyers and remortgage customers appear to be buoying the market, as low mortgage rates are encouraging borrowers to remortgage and attractive government schemes are helping first-time buyers. We expect this trend to continue over the coming months.”
The picture is not positive for home movers, whose numbers have sunk below first-time buyers. The CML is commissioning research into the reasons behind low property turnover.
“Home movers are having less luck,” said Jamei. “Their activity has been subdued for some time now and the low number of movers means fewer properties for sale. This supply and demand imbalance will continue to underpin house price values, even as the rate of price rises slows.”
While the Bank of England expects house purchase approvals to be 71,000 per month for the rest of the year, the CML is less optimistic.
Despite this, it said lending in April could signal a breakout from the last year’s average £20bn borrowing a month, as it comes in at £21.7bn on a seasonally adjusted basis.
Henry Woodcock, principal mortgage consultant at IRESS, said the trend developing this year is one of a slowing mortgage market, so the figures do not come as a surprise.
“House prices appear to have hit a peak, growing at the slowest pace for several years. Price increases may stall altogether as RICS predicts a quiet summer ahead with the number of sales and enquiries both flat,” he said.
“Lending in the buy-to-let market is down 80% over the year since the stamp duty hike in March 2016 as landlords have viewed the tax changes imposed under the new rules as ‘penalties’.”
However, he added that the market has been in good health for some time and the low interest rate environment will continue to offer buyers good finance options.
Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed.
“The over supply of money continues to keep mortgage rates low. Those cheap mortgage deals show no signs of disappearing, and those remortgaging in particular are taking advantage,” he said.
“Home movers are less able to take advantage of low mortgage rates with a lack of stock on the market meaning many can’t find a home to move to. It is further up the ladder where things have slowed to a sluggish pace.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said this is disappointing given the market should be performing well at this time of year.
“But it is not and making steady rather than spectacular process, probably more influenced by concerns about what the election and Brexit will do to market prospects in the future.”
The figures follow HMRC transaction figures out earlier this week, which showed a drop in the number of transactions between March and April.