Homeowners borrow £8.7bn in February: CML


Homeowners borrowed £8.7bn for house purchase in February, up 4 per cent month-on-month and 21 per cent year-on-year, according to the CML.

Homeowners took out 48,000 loans, up 4 per cent on January and 12 per cent on February 2015.

First-time buyers took out 22,000 loans and borrowed £3.4bn in the second month of 2016. This is a rise of 3 per cent on January 2016 and a 21 per cent increase on February 2015.

Home movers borrowed £5.3bn in February 2016, 4 per cent more than January 2016 and up 20 per cent year-on-year.

This group took out 26,000 loans, up 4 per cent month-on-month and up 14 per cent on February 2015.

Remortgages totalled £4.8bn this February, down 17 per cent on January but up 37 per cent on the previous February.

This came to 28,400 loans, down 15 per cent month-on-month but up 24 per cent compared to a year ago.

Buy-to-let landlords borrowed £3.7bn in February, unchanged month-on-month but up 61 per cent year-on-year.

This came to 23,700 loans in total, up 1 per cent compared to January and up 47 per cent compared to February 2015.

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CML director general Paul Smee says: “In 2016, there have been substantial increases in house purchase and remortgage activity year-on-year. This reflects the sluggish market in early 2015, perhaps driven by election uncertainties.

“Buy-to-let has also seen substantial year-on-year increases, with particularly strong growth in remortgaging, a pattern which we have seen in the buy-to-let sector the past six months.

“Activity has been boosted by landlords seeking to complete purchases before tax changes in April. We do not expect activity to show such strong year-on-year growth later in the year.”

The CML says affordability metrics for first-time buyers did not change much month-on-month. But the amount of monthly gross income borrowers spent to service capital and interest repayments was 18.1 per cent,  the lowest since records began in 2005.

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Legal & General Mortgage Club director Jeremy Duncombe says: “Lending showed no sign of easing off in February, as borrowers continued to take advantage of the record low mortgage rates currently on offer, and buy-to-let landlords rushing to complete ahead of the Stamp Duty increase we saw implemented on April 1st.

“On the face of it, this is good for the market, as more people are getting the mortgages they need to take a step onto or up the property ladder.

“However, a lack of supply is continuing to drive up house prices, resulting in many people still being priced out of the market completely.

“The industry and the Government need to continue to work together to realise the various construction initiatives recently announced if we are to fulfil the promise of building 250,000 properties each year.”