UK Finance’s mortgage lending trends, published today (May 16), showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018.
According to the trade body, this was the first month there had been a year-on-year decrease in first-time buyers since September 2018.
There was also a decline in the number of completed home-mover mortgages, which fell by 6 per cent to 25,280 compared to March 2018.
Mark Harris, chief executive of SPF Private Clients, said: "The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let’s hope it is just a blip in the numbers.
"First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen."
The remortgage market continued to fare better however and in total, there were 4.1 per cent more residential remortgages in March than in the same month the year before.
Within this, there was a rise in the number of those who borrowed more money through their remortgage — up 9.1 per cent to 16,810 — while ‘pound for pound’ remortgages, where the consumer does not borrow any more money, dropped slightly by 1.1 per cent to 15,030.
This was the twelfth consecutive month of year-on-year growth in remortgaging and, according the UK Finance, this reflected the number of fixed-rate deals that are coming to an end as borrowers actively search for better, more attractive rates.
The remortgage market also grew in the buy-to-let sector but the purchase market declined.
About 5,000 new buy-to-let purchase mortgages completed in March, which was 9.1 per cent fewer than in the same month in 2018, while the number of remortgages increased by 3.9 per cent year-on-year to 14,400.
UK Finance stated the buy-to-let house purchase activity continued to contract due to tax and regulatory changes.
Gareth Lewis, commercial director of property lender MT Finance, agreed.
He added: "Remortgaging is up as those who bought before stamp duty hikes were introduced in 2016 are now remortgaging their fixed rates onto another competitive deal.
"Borrowers are taking out longer-term fixes on residential and buy-to-let deals as they protect themselves from wider uncertainty."
In January, the Intermediary Mortgage Lenders Association warned that landlords would start to feel the pinch of new regulation in their tax returns for the first time, included the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016 and cuts to mortgage interest tax relief.
Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority's tightened underwriting rules.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said despite potentially disappointing numbers, there were no significant movements one way or the other.
He said: "[These figures] reflect what we are seeing at the coalface — it is a bit busier one month but down the next and then up again.
"It is no surprise either that buy-to-let mortgages are continuing their downwards trend as landlords face an onslaught of tax and regulatory changes with more on the way.
"We are finding buy-to-let remortgaging increasing is down to properties having to work harder in order to maintain profit levels so this is likely to continue."
imogen.tew@ft.com
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