Lending falls to first-time buyers

Photo: The Green Odyssey

First-time buyers saw a drop in lending in January 2015 compared to the previous month and the same month a year earlier.

19,000 loans were advanced to first-time buyers last month, down 27 per cent month-on-month and down 14 per cent year-on-year. By value, lending totalled £2.8 billion, which was down 26 per cent on December and 10 per cent down on January 2014.

Home movers were advanced 22,400 loans, a decline of 24 per cent compared to December and 17 per cent down year-on-year. These loans totalled in value £4.2bn – 24 per cent down on December and 14 per cent down compared to January 2014.

Remortgage lending, though, actually increased month-on-month with 25,600 loans advanced – up 15 per cent on December but 12 per cent down on January 2014. The value of these loans (£4.1 billion) also increased month-on-month by 21 per cent but was down 5 per centyear-on-year compared to January 2014.

The only sector to see lending jump both monthly and annually was buy-to-let, with 18,200 loans advanced to landlords in January 2015, 6 per cent up on December 2014 and up 12 per cent on January 2014. Lending to landlords totalled £2.5bn, unchanged from December but 14 per cent higher than January 2014.

Paul Smee, director general of the CML, comments: “The traditional beginning of year seasonal lull in lending is slightly more prominent in house purchase lending than in previous years, especially in comparison to the particularly strong levels at the start of 2014. Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months.”

“Increases month-on-month in remortgaging, both for home owners and in the buy-to-let market, are welcome given the recent static nature of remortgage activity. Interest rates are looking unlikely to go up in the very near future and the greater availability of good mortgage rates has probably motivated people to look at a change.”

Adrian Gill, director of Your Move and Reeds Rains estate agents, comments:  “The mortgage market has changed its’ spots in the last year.  Lending has been tamed as new regulations and affordability checks have strengthened the borrowing process.  Mortgage brokers are doing a more robust job and buyers are get sturdier solutions at the end of it.  Although mortgage approvals are now running at more manageable levels than they were this time last year, the first-time buyer market is still showing more energy than it has during any January since the recession hit, 2014 excepted.