General election jitters see mortgage lending fall in February
Official figures have revealed that the number of mortgages approved for home movers and first-time buyers fell 16% year-on-year to February as buyers put off their purchase until after the general election.
Council of Mortgage Lenders figures show that the typical dip in lending at the start of the year may have been exacerbated by uncertainty surrounding the forthcoming election.
While loans to residential borrowers fell, buy-to-let lending continued to boom.
First-time buyer and home mover mortgages fall 16% year-on-year
The latest Council of Mortgage Lenders (CML) data showed that 18,700 mortgages with a total value of £2.7bn were advanced to first-time buyers in February, 1% fewer than January and 16% fewer than February 2014.
The CML said that 21,900 loans with a total value of £4.1bn were advanced to people moving house in February, a 2% decline compared with January and 16% down on February 2014.
While residential mortgage numbers fell, buy-to-let lending continued to boom. The number of loans advanced in February was 11% higher than the same month in 2014 with 15,900 loans agreed with a collective value of £2.2bn.
Some estate agents have reported that new pension rules have encouraged retirees to withdraw cash from their pension pots in order to invest in property. However the CML said that so far, the increase in buy-to-let lending had been “almost completely” down to remortgaging.
Paul Smee, CML’s director general, said: “Seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.
“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.”
Mortgage expert Mark Harris believes that the mortgage market will pick up as the summer approaches. He said: “Buy-to-let lending is up year on year, proving its enduring popularity. The relaxation of pension rules this month is likely to provide a further boost for the sector. A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money.
“Once election uncertainty is out of the way, we expect to see a flurry of activity in the mortgage market. There will certainly be plenty of cheap mortgage rates to tempt buyers.”
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