Fall in purchases outweighs remortgage decline
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The fall in house purchase loans was more than three times the decline in remortgages in January, data from the Council of Mortgage Lenders shows.
The CML says this underlines the effect that the end of the Stamp Duty holiday in December has had on the mortgage market.
There were 49% fewer house purchase loans in January than in December but only 15% fewer remortgage loans.
House purchase loans in January hit 32,000, worth £4.7bn, and represent a significant improvement from the 23,000 house purchase loans recorded in January last year.
Remortgage loans totalled 24,000, worth £3bn, and are down from 45,000 a year ago.
The CML says this is the lowest monthly level of remortgage activity - both by number and value - on record.
The number of first-time buyers fell by 54% drop in January, with 11,300 first-time buyer loans worth £1.3bn.
In December the number of first-time buyers went up 63% for properties in the £125,000 to £175,000 band.
But in January, following the Stamp Duty threshold returning to £125,000 from £175,000, the number of equivalent transactions fell by 80% in January to account for 19% of all first-time buyers, compared with the record 42% in December.
For home movers there was a 49% increase in transactions in the £125,000 to £175,000 bracket in December, compared to a 71% fall in January.
Michael Coogan, director-general at the CML, says: “It was a quiet start to the year.
“Lending volumes in January were low, but we had predicted this would happen due to the end of the Stamp Duty holiday distorting December’s figures.
“When December and January data are taken together, they show little change in underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier.
“We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”
