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Remortgaging remains high but house purchase lending falls

There were more first-time buyers than home movers in June and house purchase lending was down on the same month last year, according to UK Finance’s Mortgage Trends Update.

A total of 34,900 new first-time buyer mortgages were taken out in June, 3.6% fewer than in the same month a year earlier. They collectively borrowed £5.8 billion, which is down 1.7% year-on-year. The average first-time buyer is 30 and has a gross household income of £42,000.

The number of new home mover mortgages completed in the month stood at 33,700, a drop of 7.9% compared to June last year.  Total new lending to home movers was £7.3 billion, down 6.4% on the previous year. The average home mover is 39 and has a gross household income of £56,000.

Remortgaging fared better, rising by 8.4% year-on-year to 37,400 new remortgages completed valued at £6.8 billion, a rise of 13.3%.

In the buy-to-let space, house purchase continued to decline in June while remortgaging remained steady.

There were 5,400 new buy-to-let home purchase mortgages completed in the month, 19.4% fewer than in the same month a year earlier. By value this was £0.8 billion of lending, a fall of 11.1 per cent.

Buy-to-let remortgages completions stayed at 12,600 and by value this was £2 billion of lending, the same as June 2017.

Comment

Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging continued to dominate in June with figures up 13% on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.

“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first-time buyers and home movers as customers adopted a ‘wait and see’ approach.

“House price inflation has moderated in recent months yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.

“And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”

Source: Mortgage Finance Gazette