Mortgages  

Further evidence of a cooling housing market

Further evidence of a cooling housing market

Data revealed today shows a cooling housing market with new mortgage lending down over the year in almost all segments, while house price growth slowed in the 12 months to February.

According to the Office of National Statistics, UK house prices increased by 7.2 per cent in the year to February, down from 8.4 per cent in the year to January.

Excluding London and the south east, UK house prices increased by 5.9 per cent in the 12 months to February and on a seasonally adjusted basis, average house prices increased by 0.6 per cent between January and February.

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Data from the Council of Mortgage Lenders also showed gross mortgage lending in February totalled £13.6bn in February - an 8 per cent decrease from January’s total and also 8 per cent less than last February.

Buy-to-let was the only segment in the market that saw an increase in annual lending and lending values, according to the CML.

There were 15,900 buy-to-let loans in February - down 13 per cent on the previous month but up 11 per cent on the same period in 2014.

The loans were worth £2.2bn in value, which was 12 per cent less than in January, but up 16 per cent on the previous February.

All other market segments saw decreases. The number of loans advanced to home-owners for house purchase lending totalled 40,600, down 1 per cent on January and 16 per cent compared with the same month in 2014.

These loans totalled £6.8bn, a 3 per cent fall on January and a 13 per cent drop 12 months ago.

There were 18,700 loans advanced to first-time buyers - also down 1 per cent on January and 16 per cent compared with February 2014. These loans were valued at £2.7bn - down 4 per cent on January and 13 per cent on last February.

Home movers were advanced 21,900 loans, a decline of 2 per cent compared with January and 16 per cent down year-on-year. These loans totalled in value £4.1bn - 2 per cent less on January and 13 per cent compared with last year.

Remortgage lending also decreased month-on-month, with 21,500 loans advanced, down 16 per cent on January and 14 per cent down on February 2014. The £3.3bn worth of these loans fell by 20 per cent on the previous month and down 11 per cent year-on-year.

Paul Smee, director general of the CML, blamed “seasonal factors” for dampening house purchase lending activity in February, adding that this may also be exacerbated by uncertainty ahead of the general election, although he expects an upturn in the spring and summer months.

“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging, which is typically strong in the buy-to-let market.”

He noted the industry body’s recent buy-to-let statement of practice, which stated what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate.

peter.walker@ft.com