New Buy-To-Let Lending has Plummeted, but Remortgaging Within the Sector is Soaring

New buy-to-let lending

During May, 5,500 new buy-to-let home purchase mortgages were completed, which is down by 9.8% on an annual basis. By value, this accounted for £0.7 billion of new buy-to-let lending in the month, down by 22.2% on May 2017.

However, 14,600 new buy-to-let remortgages were completed in the month, which is up by a sturdy 15% on May last year. By value, this £2.3 billion of lending was up by 21.1% year-on-year.

First time buyer mortgages

By contrast, some 32,200 new first time buyer mortgages were completed in May, which is up by 8.1% on May 2017. The £5.4 billion of new lending in the month was 12.5% higher on an annual basis.

UK Finance found that the average first time buyer is 30-years-old and has a gross household income of £42,000.

Homeowners and home movers

The number of new home mover mortgages also rose in May, with 31,100 completions, which is up by 4.4% on May 2017. The £6.6 billion of new lending in the month was 4.8% higher year-on-year.

The average home mover is 39-years-old and has a gross household income of £55,000.

Additionally, there were 36,000 new homeowner remortgages completed in May, some 7.1% more than in the same month last year. The £6.3 billion of remortgaging marked a 6.8% rise in the value of last May’s remortgages.

The Director of Mortgages at UK Finance, Jackie Bennett, comments on the data: “The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first time buyers and strong remortgaging activity. It is also particularly encouraging to see an increase in home movers, after a period of relative sluggishness in this important segment of the market.

“However, affordability remains a challenge for some prospective buyers, and this is reflected by a gradual increase in loan-to-income multiples.”

She adds: “Meanwhile, purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”

Written by Rose Jinks