Home owners borrowed £12.3 billion, up 29% month on month and 12% year on year. They took out 68,200 loans, up 26% on May and 8% on June 2015.
First time buyers borrowed £5.5 billion, up 28% on May and 25% on June last year. This equated to 34,300 loans, up 24% month on month and 17% year on year.
Home movers borrowed £6.9 billion, up 33% on May and up 5% compared to a year ago. This represented 33,900 loans, up 28% month on month and up 0.3% on June 2015.
Remortgage activity totalled £5.6 billion, up 8% on May and 6% compared to a year ago. This came to 32,400 loans, up 4% month on month but down 2% compared to a year ago.
Landlords borrowed £2.9 billion, up 12% month on month but down 15% year on year. This came to 18,300 loans in total, up 8% compared to May and 17% compared to June 2015.
On an unadjusted basis in the second quarter of the year home owners borrowed £30 billion, down 2% quarter on quarter and 7% year on year. They took out 169,600 loans, up 4% on the first quarter and 3% on the same quarter in 2015.
First time buyers borrowed £13.7 billion, up 23% on the first quarter of the year and up 21% on the same quarter in 2015. This equated to 87,100 loans, up 23% month on month and 14% year on year.
Home movers borrowed £16.4 billion, down 16% on first quarter and 2% compared to a year ago. This represented 82,600 loans, down 10% quarter on quarter and 6% on the second quarter 2015.
Remortgage activity totalled £16.9 billion, up 10% on the first quarter and 25% compared to a year ago. This came to 98,700 loans, up 10% quarter on quarter and 17% compared to a year ago.
Landlords borrowed £8 billion, down 46% compared to the first quarter of the year and down 9% year on year. This came to 51,600 loans in total, a drop of 45% compared to the first quarter and down 11% year on year compared to the second quarter of 2015.
The CML now publishes seasonally adjusted monthly and quarterly data (see attached), alongside the normal unadjusted data. Paul Smee, CML director general said that this makes it easier to spot underlying trends.
‘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 as these figures predominantly cover activity in the run up to the referendum,’ he explained.
‘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,’ he pointed out.
‘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,’ he added.
According to David Whittaker, managing director of Mortgages for Business, June’s data shows that the stamp duty changes may have a softer long term impact on the buy to let impact than many expected.
‘For the second month there was a strong increase in lending to landlords, which saw a sharp decline following the introduction of the new Stamp Duty Land Tax (SDLT) at the end of March. Ultimately, strong market fundamentals and demand for rental accommodation will continue to provide good returns for landlords who take an intelligent approach to investment,’ he said.
But he believes that July may be different as any Brexit effect starts to come through. ‘In the long run this will profoundly alter the state of the country’s economy, and it will be interesting to see if July’s data reflects a more conservative approach from property investors. But while macro-economic turbulence is bad news for any market, property should continue to offer investors stability given its positive fundamentals, especially when compared to asset classes like bonds, gilts and equities,’ he explained.
‘Further ahead, the Bank of England’s decision to lower the base rate this month will also make property investment more attractive, by weakening returns on savings. However, those hoping for a bonanza of cheap mortgage rates may be disappointed, as these are largely dictated by the cost of borrowing on the inter-bank swap markets,’ he added.
The figures suggest that mortgage market activity normalised in June following a period of decreased activity caused by landlords moving their transactions forward to beat the new stamp duty rate in April, according to Andrew McPhillips, chief economist at Yorkshire Building Society.
‘We expect lending to continue to grow on an annual basis, but at a less pronounced level now following the outcome of the EU referendum, which may cause some to wait until the dust settles before getting on the property ladder,’ he said.
‘That said, it is important to note that lending is largely being driven by increasing house prices which are causing people to take out larger loans for longer terms in order to get on to the property ladder. In order to bring house price inflation under control and help more people onto the property ladder, more homes must be built to bring balance between supply and demand,’ he added.
