Mortgage lending was down 11% in October compared with the corresponding month last year with £10.5bn borrowed for residential property purchases compared to £11.8bn a year ago, fresh figures show.
Home movers accounted for £5.9bn of lending, down 18% year-on-year, while first-time buyers borrowed £4.5bn, down 2% in the same period. But the steepest decline in lending was to buy-to-let landlords, which borrowed £3bn, down 21% year-on-year, the figures from the Council for Mortgage Lenders (CML) shows.
Paul Smee, director general of the CML, said: “Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders are now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.”
The amount borrowers are paying as a percentage of their household income to service capital and interest rates reached an another historic low this month for both first-time buyers and home movers at 17.6%.
Affordability metrics for first-time buyers saw the typical loan size remain unchanged from September at £133,200 in October. The average household income decreased slightly from £40,200 in September to £40,000 in October. This meant the income multiple went from 3.53 to 3.56.
The average amount borrowed by home movers in the UK increased to £171,700 in October from £171,000 in September, while the average home mover household income decreased slightly to £54,900 from £55,100. The income multiple for the average home mover remained the same month-to-month at 3.26.
On a seasonally adjusted basis, most lending trends were relatively similar. However, first-time buyer loans by value increased by 10% year-on-year, compared to a decrease of 2% on a non-seasonally adjusted basis.
Remortgage loans saw an increase month-on-month and year-on-year by volume and by value. This is the highest amount of loans taken out for remortgage since January 2009.
“Homeowner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009,” Smee added. “This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut.”