Lending in April was weaker compared to a year ago, according to the latest monthly statistics from the Council of Mortgage Lenders, while first-time buyers also saw a decline in lending compared to March and April last year.
Home mover lending volumes went up slightly month-on-month, but there was a year-on-year decline compared with April last year.
Meanwhile, buy-to-let continued to grow year-on-year, mainly driven by remortgage activity, although there was a month-on-month decline compared to March.
Paul Smee, director general of the CML, commented that the economy is recovering, with employment up, earnings growing and competitive mortgage rates, so he expects activity to continue building as the year progresses.
“Buy-to-let is showing stronger growth than home-owner lending, buoyed significantly by remortgaging, which continues to remain more subdued in the home-owner market.”
The composition of lending for buy-to-let is different compared to that of home-owner lending, as while over the past year about 30 per cent of lending to home-owners was for remortgage, in the buy-to-let market 52 per cent of lending was for remortgage.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that although it has come under attack for its tax breaks, buy-to-let remains an attractive investment option compared to the alternatives.
Commenting more widely, he stated that many lenders have ambitious targets for the year, but with borrowers unwilling to commit, they are having to slash rates even further to attract business.
“Encouragingly for first-time buyers they are paying less to service their mortgage than at any time since 2005 when the CML started measuring this. Low interest rates are making it easier for people to get on the housing ladder and for second-steppers to move up it.”
Mr Harris concluded that looking ahead to the second half of the year, there is a lot of capacity in the market, so mortgage rates will continue to be competitive. “Borrowers may also be buoyed by the certainty that the election has brought and with an interest rate rise still looking a way off, confidence is bound to be stronger.”
The Office for National Statistics also released its house price index for April, showing a 5.5 per cent increase year-on-year, down from 9.6 per cent in the year to March.
House price annual inflation was 8.8 per cent in Northern Ireland, 5.8 per cent in England, 2.2 per cent in Scotland and 1.3 per cent in Wales.
Annual house price increases in England were driven by an annual increase in the east (9.6 per cent) and the south east (8.4 per cent). Excluding London and the south east, UK house prices increased by 5 per cent in the 12 months to April.
peter.walker@ft.com
