Mortgage lending dipped in October for home movers, first-time buyers and buy-to-let landlords in a further sign that the housing market looks to be slowing.
The Council for Mortgage Lenders said a total of £10.5 billion had been lent in October. This was 11 per cent lower than October last year and down 8 per cent from September.
The council, whose members represent 97 per cent of all residential mortgage lending in the UK, said that home movers accounted for £5.9 billion of this amount, down 18 per cent from the same time last year, while first-time buyers borrowed £4.5 billion, down 2 per cent from a year earlier.
The figures, which cover mortgage advances rather than mortgage approvals, also showed buy-to-let lending has fallen sharply, with landlords borrowing £3 billion in October, which was 21 per cent lower a year earlier. Buy-to-let landlords have become less active since the extra 3 per cent stamp duty came into effect in April, and are acting more cautiously in light of upcoming mortgage regulation for the sector.
Paul Smee, director general of the CML, said: “With lenders 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’.”
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The drop in mortgage advances follows official figures this week showing a slowdown in house price growth with a rise of only 0.4 per cent on a quarterly basis to October, as sentiment appears to be weakening following the Brexit vote.
However, remortgage activity rose 11 per cent to £6.1 billion compared with September and was up 7 per cent annually to its strongest levels since 2009, as homeowners attempt to lock into low interest rates. Nine in ten mortgages issued since the EU referendum have been fixed-rate.
The CML data also shows the amount borrowers are paying as a percentage of their household income reached a historic low for both first-time buyers and home movers at 17.6 per cent. At no time since 1974 have Britons devoted less of their income to mortgage-interest repayments.
