First-time buyers cautious
The number of loans to first-time buyers is 19 per cent higher than the same time last year, new data shows, but remortgage lending has dipped by 26 per cent.
May saw just a nine per cent rise in first-time buyer loans from April, while by value, lending to first-time buyers rose 11 per cent, while remortgage lending went down by 18 per cent from April, a 15 per cent decrease in value from last year.
The number of people moving home grew from last year both by number and loan value, by nine per cent and 21 per cent respectively, the research carried out by CML showed.
Reflecting this trend, overall home-owner house purchase lending in May increased just nine per cent overall from the previous month, taking the year-on-year growth in number of loans up by 13 per cent in volume and 25 per cent by value.
Buy-to-let loans also saw a 14 per cent increase in number from May last year, and an increase of 4 per cent in volume month-on-month.
Paul Smee, Director of the CML, commented: “With May lending figures, we get our first glimpse at the effect the Mortgage Market Review has had on lending trends and, at least so far, the impact appears subtle, rather than dramatic.
First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted.
David Brown, commercial director of LSL Property Services, said:“Since the start of 2014, growth in the number of new buyers has started to slow. While enormous progress has already been made this year, the fundamentals of the housing market are still playing catch-up.”
The slow-down in house buying comes at the same time the SRA has slashed the minimum requirement for professional indemnity insurance cover.
Firms now only have to provide £500,000 cover but the decision was condemned by the Association of British Insurers, who called it ‘misguided’ and said it would ‘increase the risk to consumers of things go wrong.’
Head of ABI’s liability insurance, James Dalton, said: ‘The Legal Services Board needs to ask itself whether the SRA’s proposals are a good outcome either for the legal profession or, more importantly, the profession’s customers.’