"2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable"
The latest report from The Council of Mortgage Lenders shows that first-time buyers borrowed more during 2016 than any other year since 1974.
According to the report, first-time buyers borrowed £53.2bn for home-owner house purchase in 2016, up 13% on 2015.
On a monthly basis, first-time buyers borrowed £5.1bn for home-owner house purchase in December, up 9% on November and 13% on December 2015.
Remortgage activity was also strong in 2016 - up 14% by volume and 20% by value compared to 2015 to hit its highest level since 2009. On a monthly basis, remortgage activity was down 21% by volume and by value compared to November.
Gross buy-to-let lending also saw month-on-month decreases, down 15% by volume and 7% by value.
Of the three quarters after the stamp duty changes in April, gross quarterly lending was its highest by volume and by value in the final quarter of 2016. Nearly two thirds of buy-to-let loans were remortgages rather than house purchase.
Paul Smee, director general of the CML, commented: "2016 could have been a potentially destabilising year of regulatory and political change, but the mortgage market has been resilient and adaptable. Home-owner house purchase lending increased, though the buy-to-let sector's positive lending performance has been driven primarily by remortgaging. We do not expect the market volumes to show a year-on-year increase in 2017, instead it will remain similar to that achieved in 2016."
John Phillips, SpicerHaart and Just Mortgages group operations director, had this to say: “Whilst first-time-buyers and remortgage activity kept the market afloat last year, the number of people moving house was consistently down. This is unlikely to change in the foreseeable future as certain barriers, especially towards lending in to retirement, have the effect of holding up the market.
Of course we have the age old problem of supply. Until housing supply is sorted out we will continue to see more families living in property that is unsuitable for their needs.”
Jonathan Sealey, CEO at Hope Capital, commented: “Despite everything the housing market last year defied expectations. Although we are still below pre-crisis levels, to show any kind of increase in a such an unpredictable year gives hope for 2017.
For the time being interest rates look set to remain low and there are plenty of great deals to entice borrowers. Supply is the constant problem, and we will have to wait and see how the government’s plans to ‘fix the housing market’ are actually implemented.”
Jeremy Leaf, former RICS residential chairman, added: "These figures are particularly interesting on two counts and not least because they bear out with what we have been seeing on the high street. In other words, the housing market demonstrated a fair degree of resilience in the period leading up to the end of 2016 and more significantly perhaps first-time buyers seem to have taken the place of buy-to-let investors in some places, as the latter suffer from more taxes and regulation.
These results represent good news for the government whose medicine may finally be working in their attempts to level the playing field between those trying to get onto the ladder and those very much on it."