Home buying activity rose 7 per cent in February as first-time buyers helped to drive the total amount borrowed for house purchase to a 10-year high.
The total number of loans taken out by homebuyers - 48,600 - was also up 2 per cent year-on-year, while the total value increased by similar amounts to reach £8.9bn, according to new data from the Council of Mortgage Lenders (CML).
Lending to first time buyers rose 6 per cent on January and 12 per cent on February 2016 to reach a total of £3.8bn, while home mover activity registered a month-on-month rise of 6 per cent to reach £5.1bn.
But buy-to-let lending was down sharply following the stamp duty hike and the removal of tax relief, with the number of loans taken out falling 26 per cent compared to February 2016.
Home-owner remortgage activity was down 26 per cent by value and 23 per cent by volume on January, but rose slightly year-on-year.
Affordability metrics for first-time buyers saw the typical loan size decrease slightly from £132,300 in January to £132,100 in February as the income multiple rose from 3.53 to 3.54.
Number of loans for house purchase and remortgage in February
| Remortgage | |||||
| House purchase | |||||
| FTBs | Movers | Buy-to-let | Home owners | Buy-to-let | |
| Feb-16 | 21,800 | 25,900 | 10,300 | 28,500 | 13,200 |
| Jan-17 | 22,600 | 23,000 | 5,900 | 40,200 | 13,900 |
| Feb-17 | 24,200 | 24,400 | 5,700 | 31,000 | 11,600 |
| 1 month change | 7.10% | 6.10% | -3.40% | -22.90% | -16.50% |
| 12 month change | 11.00% | -5.80% | -44.70% | 8.80% | -12.10% |
Paul Smee, director general of the CML, commented: "Seasonal factors traditionally keep the market quieter in winter months, but 2017 began relatively strong on the house purchase side.
“Borrowers took out more loans to purchase a home in the first two months of 2017 than any year since 2007. This is down to strong first-time buyer activity which has consistently matched home mover borrowing over the past six months, a trend not seen in the UK for 20 years.
"House purchase activity on the buy-to-let lending side remains weak. This trend is expected to continue because of the tax changes from April and because lenders are tightening affordability criteria in response to PRA-mandated stress tests."
Jeremy Leaf, north London estate agent and a former Royal Institution of Chartered Surveyors residential chairman, said: “The encouraging point about the CML report is the improvement in first-time buyer lending.
“This underlines what we are finding in our offices - that first-time buyers are taking advantage of a level playing field now that so many buy-to-let investors are choosing not to add to their portfolios but rather, are staying put and even selling in some cases.
“First-time buyers are the lifeblood of the market - we need to support them even more to ensure activity is maintained over what is bound to be a tricky period for buyers and sellers over the next few months.”
simon.allin@ft.com
