New figures released today by the Council of Mortgage Lenders revealed that buy-to-let landlords borrowed £3m during August. This was down 12% on the same period in 2015.
This was from a total of 19,400 loans, up by 4% in comparison to July, but down 13% in comparison to August last year.
Gross buy-to-let lending stayed substantially lower than the levels seen in 2015. This said, there were 1,000 more buy-to-let loans given in August in comparison to July of this year. Interestingly, almost two-thirds of buy-to-let loans were remortgages as opposed to house purchase.
Home-owners took out £12.2bn for home purchases, up by 14% month-on-month and by 11% year-on-year. First-time buyers borrowed £5.1bn, a rise of 13% from July and 24% up from August last year.
However, there appears to be a number of investors renewing their landlord insurance policy, with confidence in the sector generally unwavering in the face of political uncertainty.
Paul Smee, director general of the Council of Mortgage Lenders, observed: ‘House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity. Mortgage rates remain at or close to historic lows and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months.’
‘Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels,’ he continued.
Adam Tyler, CEO at the National Association of Commercial Finance Brokers, believes there are, ‘mixed signals surrounding buy-to-let.’ He said: ‘Compared to last year, buy-to-let loan levels remain sharply down – understandably so given the punitive tax changes and volatility around Brexit. But we are beginning to see signs of a slight recovery in demand.’
However, Jonathan Sealey, Hope Capital CEO, feels the figures are positive. He notes: ‘The picture painted by the figures from the CML this morning is more positive than we might have expected, especially in a month when summer holidays usually play their part in reducing activity. The importance of lender appetite cannot be overlooked and it is fair to say that this appears to be increasing, especially towards first-time-buyers. The availability of 95% LTV products, outside the help-to-buy scheme, is encouraging for the long term growth of this sector. Although the increase in remortgaging has been on the increase, due to low interest rates, it is also good to see more people purchasing again within two months of the referendum.’
‘The next question will be can supply keep up with the renewed appetite in the market? Despite efforts, and government targets, to increase new home building the crux of the matter is that we are still not building enough houses,’ he concluded.