First time buyers take out 16% more mortgages year on year in May
The number of mortgages taken out by first time buyers rose 16% year on year into May according to the Council for Mortgage Lenders.
The 16% rise also means that first time buyers have taken out more mortgages than home movers, with first time buyers taking out 27,500 loans compared with 26,300 for movers.
The number of loans taken out by movers was up 18% on April but down 5% on May last year.
Paul Smee, director general of the CML, said: “There was a sense of the market regaining some equilibrium in May, following the stamp duty driven spike in March and the subsequent dip in April. For the second month running, first-time buyers borrowed more than home movers, the first time in 20 years that this has been the case. Buy-to-let continues at lower levels as expected, after the change to stamp duty.
“Brexit, and its likely effect on the market, is a question to which the answer will not immediately be forthcoming. Lenders will continue to be open for business as usual, but lending volumes may be affected by uncertain consumer sentiment.”
In addition to those moving and those buying for the first time, those remortgaging took out 30,900 loans, down 12% month-on-month but up 25% compared to a year ago with landlords taking out 16,600 loans in total, up 3% compared to April but down 8% compared to May 2015.
Andy Knee, Chief Executive of LMS, said: “The mortgage market in May appeared confident, with the value of borrowing up year-on-year for home-owners, first-time buyers and remortgagors.* Just buy-to-let lending was down when compared to May 2015, hampered by the change to Stamp Duty.
“The surprise result in the UK vote to leave the EU does mean a certain volatility in the housing market will ensue in the coming months and it is not yet clear exactly how this will play out, but we’re seeing little evidence anecdotally of purchases or transactions falling through.
“The Bank of England looks likely to lower the base rate to a new historic low of 0.25%, which could ensure competitive mortgage rates continue to be offered, presenting an opportunity for existing homeowners to remortgage and reduce their outgoings. However, this is not all good news as lender appetite for risk will be lower in the current economic climate, which could hamper chances for some first-time buyers.”