Mortgages  

First-time buyer lending down 13% year-on-year

First-time buyer lending down 13% year-on-year

Lending levels recovered slightly from April to May this year, although lending to first-time buyers is down compared with this time last year, according to the latest CML data.

Figures from the trade body showed that although first-time buyers saw a 3 per cent increase in the proportion of lending compared with April, overall lending to this group has declined by 13 per cent year-on-year.

The story is similar for home-movers, with figures showing a 2 per cent increase month-on-month but a 12 per cent decrease from 2014.

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According to the CML data, the year-on-year decline was partly due to the huge increase in buy-to-let loans pushing home-owners out of the market.

This has been largely driven by remortgaging, the CML said, which has risen by 36 per cent year-on-year. House purchase lending had seen a yearly 20 per cent increase.

The CML figures showed that fewer home-owners had requested remortgages, with a 10 per cent decline from April and only a 3 per cent year-on-year increase.

Referring to the remortgage figures, Jeremy Duncombe, director for Legal & General Mortgage Club, said: “With many banks currently offering historically low interest rates to consumers, now is a great time for those coming to the end of their mortgage deal to look for a new rate.

“Brokers have a responsibility to speak to clients coming to the end of their deals to make them aware that it is time to be thinking about remortgaging.”

The CML data also conveyed that the number of loans and value for home-owner house purchase loans remained consistent in May, with small increases of 1.4 and 2.4 per cent respectively.

“The value of home-owner loans for house purchase accounted for 53 per cent of gross lending, while remortgage activity accounted for 23 per cent,” the research added.

Adviser View

Mark Harris, chief executive of London-based mortgage broker SPF Private Clients, said: “Surprisingly, perhaps, given the excellent mortgage rates available, remortgaging was down. This may be due to home-owners struggling to qualify for new mortgages as a result of tougher affordability criteria brought in under the mortgage market review.”