First-time buyers increase share of UK mortgages
Total value of property loans falls amid weakness in buy-to-let market
The share of first-time buyers taking out new mortgages has reached its highest level since the Bank of England began keeping a record in 2007.
In the final three months of 2016, 22 per cent of new home loans were granted to first-time buyers, the second consecutive quarter when the share hit a new record.
The total value of new mortgages in the final quarter was £62.8bn, a 2.6 per cent fall from the previous quarter and a 0.4 per cent year-on-year fall.
The proportion of buy-to-let loans rose to 13.9 per cent in the quarter, up from 13.0 per cent during the previous three months. But both of these figures are far below the 21.4 per cent share in the first quarter of 2016, when many purchases were brought forward to avoid the introduction of higher stamp duty.
Separate data from the Council of Mortgage Lenders painted a similar picture. The trade body found that the volume of new mortgages in January 2017 fell 28 per cent compared to December and was virtually unchanged since the same month during the previous year.
Mortgages for first-time buyers increased 9 per cent compared to January 2016 but buy-to-let was down by 16 per cent compared to one year ago.
Weakness in the buy-to-let market, as well as caution from lenders, “suggests that mortgage lending will make only modest gains this year,” said Hansen Lu, a property economist with Capital Economics.
While there was a rise in loans worth more than 95 per cent of the value of the property in the Bank of England data, it was “more than offset by a drop in loans extended at between 90 per cent and 95 per cent [loan to value],” Mr Lu said.
The BoE statistics mirror data from estate agents Countrywide, which found that rents in Britain fell for the first time in six years in February due to a surge in new rental properties appearing on the market.
This surplus of rental properties was due to the spike in new buy-to-let mortgage purchases last year and some temporary cooling in London’s property market, BoE data suggests.
“It will take a while for landlords to adjust to the new environment of increased stamp duty, tougher stress tests and the imminent curtailment of tax relief,” said David Whittaker, chief executive of Mortgages for Business.