First-time buyer lending up 8% year-on-year

First-time buyers borrowed £5.1bn for home-owner house purchase in December, up 9% on November and 13% on December 2015 and more than any other year since Council of Mortgage Lenders’ records began in 1974.

First-time buyer activity totalled 32,000 loans, up 7% month-on-month and 8% year-on-year.

Home-owner house purchase lending totalled £11.6bn in December, up 5% on November and 3% on December 2015. This came to 63,600 loans, up 5% on November and 0.2% on December 2015.

Meanwhile home movers borrowed £6.5bn, up 3% on November but down 3% year-on-year. This totalled 31,600 loans, up 3% month-on-month but down 7% compared to December 2015.

Home-owner remortgage activity was down 21% by volume and by value compared to November. Compared to December 2015, remortgage lending was up 7% by volume and by value.

Paul Smee (pictured), director general of the CML, said: “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 remain similar to that achieved in 2016.”

Indeed, gross buy-to-let saw month-on-month decreases, down 15% by volume and 7% by value.

Compared to December 2015, the number of loans decreased 21% and the value of these loans decreased 18%.

In the fourth quarter gross buy-to-let lending decreased to £6bn, down 2% on the previous quarter and 3% on the same quarter in 2015. This totalled 57,400 loans, up 2% quarter-on-quarter but down 20% year-on-year.

Jeremy Duncombe, Director, Legal & General Mortgage Club, said: “After a turbulent year politically, the mortgage market still managed to end the year on a strong note.

“In the second half of 2016 remortgaging dominated the market as both homeowners and landlords took advantage of record low interest rates.

“It’s also reassuring to note the year-on-year increase in first-time buyer activity as more people were able to take their first steps onto the property ladder.

“That said, these figures highlight the supply and demand gap, which continues to support runaway house price inflation. For as long as demand outstrips supply, this trend will continue.

“The government’s recent Housing White Paper has promised some solutions, including help for smaller developers, but it still feels evolutionary not revolutionary.

“The topics of stamp duty, planning and the green belt may need to be looked at again if we really want to fix our broken housing market.”

And Jonathan Sealey, chief executive at Hope Capital, added: “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.”

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Written by: Houseladder