The figures show the full impact of new mortgage rules introduced a year ago and suggests that people are staying put for longer with mortgage pricing at record lows.
The total number of loans advanced to first time buyers in March was up 20% compared to February but 5% down compared to March 2014. First time buyers borrowed £3.4 billion, which was up 21% on February and 3% up on March last year.
Loans to home movers increased by 14% compared to February but was down 3% year on ear. These loans were worth £4.9 billion, up 17% on February and 7% compared to March 2014.
Remortgage lending increased 19% month on month and 6% year on year. The value of these loans at £4.2 billion also increased month on month by 24% and was up 14% year on year compared to March 2014.
Buy to let loans also increased month on month and year on year, up 12 compared to February and up 21% compared to March 2014. These loans were worth £2.7 billion, up 13% compared to February and up 35% on March 2014.
The quarterly figures show how much lending has slowed. First time buyers took out 61,300 loans in the first quarter 2015, down 24% on the fourth quarter of 2014 and 11% down on the first quarter of 2014. They borrowed £9 billion, down 23% on the fourth quarter of 2014 and a year on year decrease of 5% compared to the first quarter of 2014.
Home movers took out 70,400 loans, a decrease of 25% compared to the fourth quarter 2014 and a decrease of 11% year on year. These loans totalled £13.5 billion, down 22% on the previous quarter and 5% down year on year on the first quarter of 2014.
Remortgage lending increased quarter on quarter with 75,400 loans advanced, up 3% on the fourth quarter 2014 but down 5% on the same quarter last year. The value of these loans at £11.8 billion also increased quarter on quarter by 6% and was up 2% year on year compared to quarter one of 2014.
There were 52,300 buy to let loans advanced in the first quarter of 2015, down 3% on the previous quarter but up 15% on the same period in 2014. These loans were worth £7.8 billion in value, up 1% compared to the first quarter and up 28% on the first quarter of 2014.
‘It was a slow start to activity in the first couple of months of 2015 but the market started to get out of the dip in March, a trend that we think will continue as the year goes on,’ said Paul Smee, director general of the CML.
‘We will have to wait and see how the housing market reacts to the general election result and the reduction in the risk of a prolonged period of market uncertainty which could well have been damaging to businesses and the housing market,’ he pointed out.
‘As previously reported, gross mortgage lending reached £16.1 billion in March. This represents an 18% increase from February's gross lending total and 5% higher than lending in March 2014. This means gross lending for the first quarter of this year was £44.5 billion, down 13% on the previous quarter and a 4% decrease on the first quarter of 2014,’ he added.
According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), the CML data indicates the early momentum for 2015 clearly rests with the remortgage market, with the number of loans rising in the first quarter while both first time buyer and house purchase lending are slowing.
‘The fact that people are staying put for longer and mortgage pricing is at record lows gives people added incentives to reassess their existing loans, and should help to bring the remortgage market further out of its slumber,’ he said,
‘We are still in a transition period where year-on-year comparisons of lending activity hark back to the time before the Mortgage Market Review (MMR) was implemented. This undoubtedly has a distorting effect and means the annual drop in purchase activity should be treated with caution,’ he explained.
‘All the same, there is no denying that regulatory creep over the last 12 months has had a subduing effect on the market and left a big question mark hanging over the potential for it to regain its previous momentum. Indeed MMR is designed to bite harder the more active the market becomes. On that basis lending will not run out of control, but we are still waiting for significant supply-side measures to balance the picture and help keep prices down,’ he concluded.
Patrick Bamford, director of mortgage insurance Europe for Genworth, believes that the fall in first time buyer lending will come as a blow to aspiring homeowners’ prospects for the year.
‘While activity is anticipated to pick up now the election is out of the way, concerns still linger about the challenges hopeful buyers face and the growing hurdles they have to climb to buy a home,’ he pointed out.
He explained that the firm’s research shows that Help to Buy 2 is operating at just 13% of its potential capacity and could be helping an additional 200,000 first time buyers. ‘There’s little doubt that the scheme has improved their fortunes but it is clear more needs to be done as first time buyer activity remains far lower than it was before the recession,’ said Bamford.
‘Help to Buy remains a temporary solution to a permanent problem and is due to expire at the end of next year. There are signs that high loan to value (LTV) lending is increasingly reliant on Help to Buy which raises questions about how competition and access to 90 to 95% LTV loans will fare when the scheme ends,’ he added.
‘The government must work with the mortgage and insurance industries to find a long term solution and make this kind of scheme a permanent feature of the market,’ he concluded.