Lending to first time buyers fell 11% in November 2014 compared to the previous month and was down 3% on November 2013. By value, there was £3.8 billion advanced to first time buyers, 12% down on October but 6% up on November last year.
Lending to home movers also declined month on month by 13% and by 10% on November 2013. By value, lending to movers totalled £5.4 billion, down 14% on October and 5% on November last year.
Remortgage lending activity saw an 8% decline month on month and was 16% down on November 2013. The value of these loans at £3.6 billion was down 10% on the previous month and down 14% on November of the previous year.
There were 17,700 buy to let loans in November, representing lending of £2.4 billion, a 10% decrease on the previous month, however, compared to November 2013, the number of loans increased 9% and the value of these loans went up 14%.
Paul Smee, director general of the CML, said that the easing back of activity is not completely unexpected as there is usually a seasonal lending dip in the winter months, adding that the major industry changes and more restrained market sentiment have inevitably caused month to month fluctuations over the last 12 months.
‘Our forecasts are for gross lending to continue to grow over the next two years and this reflects our belief that there are more stable conditions in the market than a year ago,’ he explained.
According to Steve Bolton, founder and chairman of Platinum Property Partners (PPP), significant increases in average house prices over the past year have made buy to let a very attractive investment prospect.
He pointed out that recent research from Savills shows that property investors with buy to let assets have experienced capital appreciation of 17% over the last 12 months. ‘There are also positive signs for further growth in the buy to let market. Our recent research shows that two in five landlords plan to expand their portfolios this year and it is anticipated that the pension freedoms coming into play in April will encourage further buy to let investment,’ he said.
‘Rental demand shows no sign of slowing, as more than 8.5 million people in England now rent from a private landlord. But there is still a worrying imbalance between supply and demand. Landlords have a responsibility to look at ways of providing more rental accommodation that is of a high standard but also affordable,’ he explained.
‘Buy to let models such as Houses in Multiple Occupation (HMO) are an efficient way of making use of existing housing stock as well as providing quality accommodation at much lower costs, enabling renters to save more towards their long term financial goals,’ he added.
Adrian Gill, director of Your Move and Reeds Rains estate agents, pointed out that the UK mortgage market has braved a raft of regulatory changes over the last year, and the latest wave of loan to income caps in the autumn seem to have deterred demand further.
‘But this downturn comes despite such good fundamentals. All the supports are in place to help first time buyers sail onto the property market. With record low inflation holding off an interest rate rise, buyers can delight in falling mortgage rates and competitive long term fixes on the market,’ he said.
‘There are also positive signs that mortgage repayments are reducing as a proportion of income, helped along by sturdier wage growth, and the new stamp duty rules has lessened the burden of immediate transactions costs, injecting further demand at the bottom rungs of the market,’ he added.
‘However, beyond the south of the country, the average price of a starter home often doesn’t even touch on the lowest tax threshold. So in these areas Help to Buy and higher LTV lending remain the key lifelines, making gathering that vital deposit more workable,’ he concluded.
