Buy-to-let is the only area that has seen mortgage lending grow in the last 12 months, data from the Council of Mortgage Lenders revealed, with mortgage lending to first-time buyers and homemovers plummeting.
There were 19,000 loans advanced to first-time buyers January worth £2.8bn, down 14 per cent and 10 per cent compared to January 2014. Home movers were advanced 22,400 loans with a value of £4.2bn, a decline of 17 per cent and 14 per cent.
Remortgage lending increased month-on-month with 25,600 loans advanced, but this was still down 12 per cent down on January 2014. The value of these loans, £4.1bn, represented a 5 per cent decline year on year.
Bucking the trend was the buy-to-let sector. There were 18,200 buy-to-let loans with a combined value of £2.5bn in January, up 12 per cent and 14 per cent on the same period in 2014.
Paul Smee, director general of the CML, commented that the traditional beginning of year seasonal lull in lending is slightly more prominent in house purchase lending than in previous years, especially in comparison to the particularly strong levels at the start of 2014.
“Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months. Increases month-on-month in remortgaging... are welcome given the recent static nature of remortgage activity.”
Buy-to-let could be set to surge further, as Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed with others in the sector that the pension freedoms coming next month could encourage retirement savers to cash out and invest in property.
He said: “A combination of cheap mortgage rates, easing criteria, plenty of demand from tenants and poor savings rates, are convincing many that investment property is the sensible home for their money.”
Mr Harris’s comments come on the back of claims from portal Rightmove that agents had seen an increase in enquiries from prospective older buyers, many of whom could use their fund as a deposit for a mortgage in a sector unencumbered by MMR affordability rules.
Advisers have reacted angrily to suggestions the practice could be widespread, with many stating they would refuse to work with clients seeking to go down this route due to the hefty tax liabilities involved.
Last month, advisers and estate agents acknowledged there could be a rush to buy-to-let in April, although many claimed the scale is being overblown as few people have a large enough pot to meet inflated property prices.
peter.walker@ft.com
