The figures revealed that remortgages were also down, dipping by 0.6% and homemover mortgages saw a fall of 8.4%.
Landlords also remained cautious as buy-to-let purchases continued to decrease, with 5,200 completions in September - 18.8% fewer than in September 2017. Buy-to-let remortgages also fell by 0.8% by volume compared to this time last year.
Jackie Bennett, director of mortgages at UK Finance, said: “Overall remortgaging for both residential and buy-to-let properties have levelled out after a period of strong growth. This reflects the number of fixed rate loans reaching maturity.
Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes. Demand for house purchases for both first-time buyers and homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”
Mike Scott, chief property analyst at Yopa, says: "UK Finance reports a slowdown in the mortgage market, with 4.5 per cent fewer mortgages completed in September than the same month last year. This is largely driven by a fall in mortgages for home movers, down by 8.4 per cent, with first-time-buyer mortgages down by only 0.6 per cent. Buy-to-let mortgages are down by 18.8 per cent, as the market shrinks further following recent tax changes, but they are now only a small part of the total market and have little impact on the overall number of mortgages.
This fall is in line with figures for the number of house sales, which are also down by a few percent on the same time last year, indicating that 2018 has been a slightly less active year in the housing market than other recent years. With the economic fundamentals remaining strong, we do not expect the market to slow down much further as we move into 2019.
The average first-time-buyer purchase price is now £172,000 while the average home mover pays £254,000. First-time buyers are borrowing a slightly higher multiple of their salary than home an average of 3.68 times for first-time buyers compared with 3.45 times for home movers. However the mortgage repayments as a percentage of gross earnings are very similar for both groups but slightly higher for home movers, 17.5 per cent compared with 17.8 per cent."
John Phillips, group operations director at Just Mortgages and Spicerhaart, says : "Brexit, Brexit, Brexit. Whether it is Brexit itself, or, more likely, the uncertainty it brings, one thing is for sure – it is impacting the mortgage market.
We have seen purchasing take a real hit over the past few months, and this is mirrored by UK Finances’ lending figures today, which show first-time buyer mortgages are down 4.5% on last year and home mover mortgages are down 8.4%.
In our business, remortgage is by far the strongest area of the business and is actually rising. The UK Finance figures show a drop, but it is a very small one 0.6%, which suggests remortgage is the strongest area of lending across the market. Buy to let has seen the biggest hit - an 18.8% drop, and while market uncertainty is sure to have affected this area too, it has probably been hit harder due to all the recent changes in the BTL market over the past 18 months.
I think that basically we will see this slow down continue, especially in the purchase market, until we have some sort of stability back. The Prime Minister said today that they are in the ‘final stages’ of negotiations, but still, no deal has been reached, and there is a real possibility of a no deal Brexit. Whatever happens, I think it will continue to affect the market until at least March. Then we will have a period of ‘wait and see’ when people start to get their heads around what, if any, impact the final deal has. So in all likelihood, it will probably be summer next year before we see the market start to recover.”
Dilpreet Bhagrath, Mortgage Expert at Trussle, comments: “The market is looking subdued at the moment as a lot of financial pressure is putting new buyers off and many people are reluctant to buy and sell properties until the Brexit deadline has passed.
What is positive is that remortgaging numbers are only fractionally down from last year, despite fewer people moving home this year. Switching to a different Fixed Rate mortgage product can save households thousands of pounds a year. With two million people currently on a Standard Variable Rate (SVR) mortgage, we hope that with the increased use of technology making the switching process easier, we’ll see more remortgages and fewer people languishing on an SVR."
Richard Pike at Phoebus Software, had this to say: “We have seen a downward curve with mortgage transactions falling month on month across the board. Unfortunately, this was always going to be the case the closer we get to the final Brexit deadline. According to the Bank of England household sentiment is fairly buoyant as wage growth rises above inflation. However, when it comes to the wider economy most people are much less confident as we wait in limbo for the outcome of Brexit negotiations. The brakes have definitely been applied with regards to purchasing and once again our industry will be relying on remortgages to keep its head above water.
At the risk of sounding like a broken record, we are in for a rocky few months. Until we know what kind of a deal we will secure with the EU it is safe to say that people will remain cautious and that is likely to be reflected in the number of property sales.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "The UK Finance figures don’t appear to take into account product transfers, which will have a significant impact on remortgage numbers. This market is much larger today than 12 months ago as borrowers opt for the simpler process of sticking with the same lender and moving onto another rate, rather than starting a new application with another lender.
The mortgage market is inevitably subdued as people delaying decision-making while the political and economic uncertainty continues. This is likely to continue into the spring, until we pass the Brexit deadline in March, by which point some of that pent-up demand may be released and the market could well pick up.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "These figures are an important indicator of the future direction of the housing market. They are showing, once again, that activity is softening but Brexit is not the only culprit. Affordability concerns continue to weigh heavily in many areas, although there is more resilience outside London and the South East.
Buy-to-let investors are still not returning to the market or buying for the first time in sufficient quantities to provide support at the bottom end of the market and first-time buyers are not taking up the slack. The result is a bit of a standoff until clearer political and economic direction becomes apparent."
