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August house purchase lending up 11%

August house purchase lending up 11%

Home-owners borrowed £12.2bn for house purchase in August, according to the Council of Mortgage Lenders, up 11 per cent year-on-year.

The Bank of England’s decision to cut the base rate to 0.25 per cent in August coincided with the CML reporting a surge in lending as home-owners took out 66,000 loans, up 13 per cent on July and 9 per cent on August 2015.

First-time buyers borrowed £5.1bn, up 13 per cent on July and 24 per cent on August last year. This equated to 31,800 loans, up 12 per cent month-on-month and 19 per cent year-on-year. 

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Meanwhile home movers borrowed £7.1bn, up 15 per cent on July and 3 per cent compared to a year ago. 

Remortgage activity totalled £5.9bn, down 2 per cent on July but up 41 per cent compared to a year ago. 

This came to 34,900 loans, up 4 per cent month-on-month and 40 per cent compared to a year ago.

Landlords borrowed £3bn, unchanged month-on-month but down 12 per cent year-on-year.  In April purchasing landlords were hit with a 3 per cent increase in the rates of stamp duty land tax and they are facing a raft of affordability measures.

Paul Smee, director general of the CML, said: “House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity.  

“Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months. 

“Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. 

“This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels.”

 House purchaseRemortgage
 FTBsMoversBuy-to-letHome ownersBuy-to-let
Aug-1526,70033,70010,60025,00011,500
Jul-1628,30030,0006,00033,50012,300
Aug-1631,80034,2006,50034,90012,800
1 month change12.40%14.00%8.30%4.20%4.10%
12 month change19.10%1.50%-38.70%39.60%11.30%

Mark Harris, chief executive of mortgage broker SPF Private Clients, said July’s figures showed a dip in confidence with a decline in number of first-time buyers and home movers, whereas August paints a much more positive picture. 

He said: “While August showed an encouraging pick-up for the market, September and October have been busy as borrowers move to secure a cheap mortgage deal. 

“There is renewed interest from people keen to get deals done. Lenders will have one eye on year-end targets and we expect to see some cracking deals over the coming weeks.”

emma.hughes@ft.com