The number of new mortgage commitments agreed by lenders fell to their lowest level since 2016 during the first quarter of this year as the share of first-time buyer home loans dropped back, the latest Bank of England figures reveal.
The value of new mortgage commitments was £61.1 billion during Q1 2018, a 5.9 per cent decrease from Q4 2017.
Quarter-on-quarter there was a 9.6 per cent drop in gross advances to £62.4 billion, although this was 3.3 per cent higher than the same period in 2017.
The share of first time buyers (FTBs) has decreased to 19.6 per cent in Q1 2018, which is a 1.6 percentage point decrease on last quarter.
The share of buy-to-let lending has increased for the first time since 2017 Q1, accounting for 13.9 per cent of new lending.
On the other hand, remortgages increased by 3.2 percentage points from 29.7 per cent to 32.9 per cent
The proportion of high loan-to-income (LTI) (single income above 4x and joint income above 3x) lending has decreased this quarter.
The highest loan-to-value (LTV) (Above 90 per cent LTV) brackets have also seen a decrease in new lending.
The Bank says this is linked to the fall in the house purchases share, with a greater proportion of remortgages.
New lending in the lowest bracket of 75 per cent and below has increased to 66.1 per cent of the total figure.
When compared with the previous quarter (Q4 2017) there has been a 3.4 percentage point decrease in the proportion of new loans for house purchases from 64.4 per cent to 61 per cent, driven by a further decrease in home movers.
The proportion of total loans in arrears has continued to fall with the outstanding balance in arrears now £14.8 billion – the lowest since records began.
Former Royal Institution of Chartered Surveyors residential chairman and north London estate agent Jeremy Leaf says: “Although a little historic, the decrease in mortgage lending is disappointing.
“But of more concern is the fall in proposed advances.
“The reduction in the proportion lent to first-time buyers when buy-to-let investor borrowing increased for the first time in more than a year may be a sign that the Government’s intention to ‘level the playing field’ between the two groups is not working.”
He adds: “On the ground, we have noticed more interest in competitively-priced smaller houses rather than one and two-bedroom flats which have previously been favoured by first purchasers and landlords.
“However, commitment is hard to generate while political and economic uncertainty reigns unless buyers and sellers take full account of the new softer market conditions.”