"The figures show a month-on-month decline in first-time buyer and home mover activity and muted activity on the BTL market"
First-time buyers borrowed £4.4bn, down 19% on June and 4% on July last year. This equated to 28,200 loans, down 17% month-on-month and 6% year-on-year. Home movers borrowed £6.2bn, down 9% on June and 16% compared to a year ago. This represented 29,900 loans, down 11% month-on-month and 19% on July 2015.
The report also revealed that remortgage activity totalled £6bn, up 7% on June and 20% compared to a year ago. This came to 33,400 loans, up 3% month-on-month and 10% compared to a year ago.
Landlords borrowed £3bn, up 3% month-on-month but down 21% year-on-year. This came to 18,600 loans in total, up 1% compared to June and down 26% compared to July 2015.
Paul Smee, director general of the CML, commented: “These figures cover the first full month of lending following the EU referendum. They show a month-on-month decline in first-time buyer and home mover activity and muted activity on the BTL market. It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market which was already cooling. It will be quite some time before a full assessment can be made. We do believe that the Buy-to-let lending market is still readjusting after the large level of activity before the changes to stamp duty on second properties in April.
Remortgage lending on the other hand has continued to grow, and reacted with a 7-year monthly high. Borrowers seem keen to take advantage of the wide range of competitive deals in the market and, following the base rate cut in August, this is likely to continue.”
Home-owner house purchase lending
While first-time buyer lending was down in July compared to June, the number of loans advanced to first-time buyers was higher than any other month this year. Home mover activity was at its third highest monthly level this year by volume and by value in July, after March and June. On a seasonally adjusted basis, first-time buyers and home movers decreased by volume 13% and 7% respectively in July compared to June, but the number of loans to first-time buyers increased 8% compared to July last year, while the number of loans to home movers decreased 7% year-on-year.
Affordability metrics for first-time buyers have remained relatively stable. The typical loan size decreased to £133,000 in July from £135,700 in June, while the average household income of borrowers purchasing their first home also decreased slightly from £40,400 in June to £40,100 in July, which meant the income multiple was unchanged at 3.55.
The average amount borrowed by home movers in the UK increased to £171,400 in July from £171,000 in June, and the average household income of a home mover also increased to £55,000 from £54,700. This meant the income multiple went up from 3.26 to 3.29 month-on-month.
Remortgage lending saw a month-on-month and year-on-year growth in July. £6bn was borrowed in total in the month for remortgage which, alongside April 2016, is the highest monthly amount borrowed for remortgage since January 2009.
Buy-to-let lending in July
Gross buy-to-let lending, while lower than levels we saw last year, saw the highest monthly levels of activity by volume and by value since the stamp duty changes on second properties came in on April 1. Buy-to-let remortgage lending continues to be the driver, making up two-thirds of gross lending.
