Mortgage lending still on the rise, despite Brexit uncertainty

Similarly to May’s Council of Mortgage Lenders (CML) figures, borrowing is defying predictions.

Both first-time buyers (FTBs) and home movers are borrowing more monthly and compared to 2015 figures, according to the latest CML report for June 2016.

Up by a quarter since the same period last year and up 28% compared to May, the amount FTBs are borrowing is increasing, and they are seemingly not being detracted by the recent political changes. The 34,300 loans for the month equated to £5.5 billion being borrowed.

The amount being borrowed by home owners and home movers are also on the up, with totals reaching £12.3 billion and £6.9 billion respectively.

Paul Smee, Director General of the CML, said: “These figures reveal growth in house purchase activity and in particular for first-time buyers. As ever, there is uncertainty and it will take more time and patience to understand how the market will evolve in the current environment – these figures predominantly cover activity in the run-up to the referendum. We still believe that the mortgage market is well capitalised, resilient and open for business, and will remain so for the foreseeable future. “First-time buyers are continuing to drive house purchase lending, outperforming home movers for the third month running. More loans were advanced to them in June than at any time since August 2007. Buy-to-let house purchase activity remains lower than before the stamp duty changes at the beginning of April, but showed a large month-on-month increase. As might be expected, buy-to-let remortgage seems to have been less affected by the changes and remains consistent with lending last year.”

Richard Connolly, Chief Executive Officer at Rentplus, said: “It’s reassuring to see an increase in first-time buyers in June, confirming that more young Britons are realising their dream of homeownership. However, homes unfortunately still remain unaffordable for many, with house prices rising faster than wages during the year. First-time buyers are therefore having to increase their borrowing even further, just to get a foothold on the property ladder. Despite low interest rates and other incentives, homeownership remains out of reach for many; with rents continuing to rise, this further hinders progress on savings for a deposit.

“With the changing economic climate after the EU referendum, the challenge of increasing homeownership may now steepen. While low interest rates may make obtaining mortgages more affordable, there could further hurdles such as potential slowdowns in employment or construction making it more difficult to buy a home. To give first-time buyers a boost, the government needs to implement a range of mixed tenure options to help improve access to housing.”

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