Mortgage market in the UK softened in March, latest finance data reveals

There has been a small increase in lending to first time buyers in the UK in March compared to a year earlier, but remortgaging and buy to let levels have softened, the latest financial data to be published shows.

Overall, there was £5.1 billion of new lending to first time buyers in the month, up 2% year on year but the number of first time buyer mortgages completed fell by 1.9%. The data also shows that the average first time buyer is aged 30 and has a gross household income of £42,000.

The data from UK Finance also shows that there was £6.1 billion of new lending to home movers, fall of 4.7% year on year while completions fell by 7.8%. The £5.6 billion of remortgaging was down by 9.7% year on year while completion fell by 12%.

Buy to let lending also declined, with numbers down 19.1% year on year. By value there was a fall of 20%. UK Finance research suggests the recent softening of the buy to let market is mostly down to a number of recent tax and regulatory changes including the limiting of landlords’ mortgage interest tax relief, the extra 3% stamp duty on additional homes and new underwriting requirements introduced by the Prudential Regulatory Authority (PRA).

There were 12,600 new buy to let remortgages completed in March, some 0.8% more than in the same month a year earlier. By value this was £2.0 billion of lending in the month, unchanged year on year.

‘Remortgaging levels softened in March, after a busier than usual start to the year saw customers locking into attractive deals ahead of a potential interest rate rise. There has been relatively flat growth in lending to first time buyers, reflecting recent Bank of England figures showing a fall in mortgage approvals. Meanwhile the buy to let market remains subdued, as recent tax and regulatory changes continue to have an impact on demand,’ said Jackie Bennett, director of mortgages at UK Finance.

Separate figures from the Bank of England show that gross mortgage lending in the first quarter of 2018 was £61.1 billion, up 3.4% from £59 billion in the first quarter of 2017.

Credit scoring remains a major obstacle for some borrowers trying to climb the property ladder, according to Steve Seal, director of sales and marketing at Bluestone Mortgages. He believes that High Street lenders are still failing to address the needs of a significant group of would-be home owners, such as the self-employed or borrowers who have suffered a bump in their credit history due to an unexpected life event.