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Home > Mortgages > Mortgage Data

By Emma Ann Hughes | Published Jun 14, 2012

CML reveals April decline in mortgage lending

Mortgage lending, particular to first-time buyers, declined in April compared with March, according to new data from the Council of Mortgage Lenders.

The largest fall in April was to first-time buyers, with lending at around half the levels of the previous month.

The drop off in activity for first-time buyers was seen mainly among properties that would have qualified for the exemption in March so were subject to stamp duty in April.

Purchases of properties valued between £125,000 and £250,000 fell by 70 per cent in April compared with March.

In contrast those valued at £125,000 or less, so still exempt from stamp duty, fell by a more modest 11 per cent, while first-time buyer purchases for properties worth more than £250,000, so not eligible for the exemption in any case, fell by only 5 per cent.

In total, 12,600 loans were advanced to first-time buyers, down by 48 per cent compared with March and 12 per cent compared with April 2011.

By value, first-time buyers borrowed £1.5bn, down 52 per cent compared with March and 12 per cent compared with April last year.

The average loan amount fell from £117,000 in March to £98,000 in April and first-time buyers typically borrowed 3.12 times their income, down from 3.34 in March.

Lending to home movers also fell with 23,400 loans worth £3.8bn taken out in April, down by 15 per cent (14 per cent by value) compared with March but an increase of 3 per cent (by volume and value) compared with April 2011.

Paul Smee, director general of the CML, said: “April’s figures show the expected effect of the end of the stamp duty concession on UK mortgage lending. Given the economic uncertainty, any significant pick up in lending in the coming months seems unlikely.

“However, our recent research highlights that over 80 per cent of people still aspire eventually to own their own homes, and long term demand clearly still exists.”

David Whittaker, managing director of Mortgages for Business, was critical of the report.

He said: “It seems we can’t go more than a few months without some government initiative, national event or unseasonal weather phenomenon impacting the mortgage market and distorting the lending figures.

“The end of the stamp duty holiday had the expected effect, a rush of activity followed by a deep lull and many doomsday analysts will tell you this is a disaster.

“However, in reality, the lending market is performing better than many will admit. Over the first four months of 2012, the overall number of loans for house purchase is up 15% on the same period last year, and for first-time buyers the number of loans is up 20% and these figures include the suppressed activity felt in April.”

He added: “While we’re far from being out of the woods, the market is making steps in the right direction and that mustn’t be lost among the talk of huge monthly falls in activity.”

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