House purchases fall to lowest levels since 2015

14th March 2017
"Today’s figures continue to build on the precedent set in 2016"

According to the latest data from CML, the number of loans advanced for house purchases during January fell to its lowest monthly level since February 2015.

However, remortgage activity continued to rise - up 54% by value and 46% by volume on December. Further analysis revealed that home buyers borrowed £8.4bn in January, down 28% on December and unchanged on January 2016. By contrast, compared to January 2016, remortgage lending was up 22% by value and 21% by volume.

Gross buy-to-let also saw month-on-month increases, up 11% by value and 12% by volume. However compared to 2016 both the number of loans and the amount borrowed decreased by 16%.    

On a seasonally adjusted basis, the month-on-month change in first-time buyer and home mover activity was minimal. First-time buyer lending increased 2% by value with the number of loans down 2% compared to December.

The number of home mover loans remained unchanged month-on-month and the total amount borrowed increased by 3%, while year-on-year activity decreased slightly by value and by volume.

Paul Smee, director general of the CML, commented: "January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector. We expect a seasonal dip in activity in the winter months and this appears to be the case in January. However, the lull in moving activity appears stubbornly persistent, and we have commissioned research on the reasons why the number of transactions seems in secular decline.

Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April."

Jeremy Duncombe, Director, Legal & General Mortgage Club, added: “Today’s figures continue to build on the precedent set in 2016. The buzz of activity around remortgaging continues, as practical homeowners seize the opportunity to potentially save themselves around £2,000 a year by switching their existing mortgage deal.

At a first glance, today’s figures paint a positive picture of our housing market, highlighting the strength and robustness of this vital sector. However, it also highlights the higher sums that first time buyers are borrowing to get themselves onto the housing ladder due to the ongoing disparity between house price inflation and wage inflation."

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "While there is little change month-on-month, the figures are encouraging because they demonstrate market resilience - which is what we are seeing at the coalface. Encouragingly, we have noticed a bit of a pick-up in activity over the past few weeks as buyers and sellers seem to be getting on with it as they usually do at this time of year.

Listings are improving but property must still be very compelling in terms of price, location and presentation - or all three - in order to gain attention from increasingly discerning buyers."

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Remortgaging remains hugely popular as borrowers take advantage of rock-bottom rates. Lenders are keen to lend and this appetite shows no signs of diminishing.

The dip in activity over the winter months explains why January tends to be a relatively quiet month for the mortgage market. These numbers should pick up as we move into spring, as this is usually a busier time of the year for the housing market."

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