Homebuyer Activity Dropped in April, but is Up on Last Year

Homebuyer activity was down by 14% on a monthly basis in April, but was up by 19% on last year, shows the latest mortgage lending trends report from the Council of Mortgage Lenders (CML).

The data shows that homebuyers borrowed £9.6 billion in April, amounting to 51,200 loans, which is down by 16% on March, but up by 9% on April 2016.

Within this, first time buyers borrowed £4.1 billion – down 16% on March, but up by 8% on April last year. They took out 25,400 loans – 18% less than in the previous month, but 2% more than 2016.

Homebuyer Activity Dropped in April, but is Up on Last Year

Meanwhile, home movers borrowed £5.5 billion – down by 11% on March, but up by a significant 28% annually. This equated to 25,700 loans – a drop of 15% on a monthly basis, but up by 17% year-on-year.

Homeowner remortgage activity was down by 16% by value and 18% by volume on March’s figures, the CML found. Compared to April last year, remortgage lending was down by 15% by value and 16% by volume.

Gross buy-to-let lending also saw month-on-month decreases – down by 17% by value and 16% by volume. Compared to last year, the number of loans rose by 1%, while the amount borrowed remained unchanged.

In another set of data – seasonally adjusted figures – the CML found that first time buyer and home mover lending increased by value and remained relatively unchanged by volume compared to March.

Buy-to-let and remortgage activity also stayed fairly similar in April from March.

The proportion of household income used to service capital and interest rates continued to sit near historic lows in April for both first time buyers and home movers, at 17.3% and 17.5% respectively, the report shows.

Affordability metrics for first time buyers saw the average loan size rise from £133,500 in March to £136,500 in April. The average household income also increased, from £40,000 to £40,700. This takes the income multiple to 3.57, from 3.53.

The average amount borrowed by home movers in April grew from £172,400 to £175,500 on a monthly basis, while the typical home mover household income rose between March and April, from £54,100 to £55,200. The income multiple went up to 3.35 as a result, from 3.34.

The Director General of the CML, Paul Smee, comments: “April comparisons are distorted by the weakness last year following the Stamp Duty changes, and the normal seasonal lending surge in March. But the seasonally adjusted picture shows lending relatively unchanged month-on-month across all lending segments.

“Heading into the summer months, we expect the market to remain slightly lopsided. Buy-to-let and home movers may well remain subdued, as they have been for the last six months. But both first time buyer and remortgage lending should maintain momentum on the coattails of the attractive deals available.”

Shaun Church, the Director of mortgage broker Private Finance, continues: “The mortgage market remained relatively subdued in April and, although lending volumes are higher than a year ago, this is in the context of an extremely quiet April 2016 following the changes to Stamp Duty. The figures for April are also skewed somewhat by a seasonal lending surge in March, which the CML acknowledges. One of most significant barriers to increased activity remains the lack of supply and, while this issue persists, the market will struggle to get into gear.

“However, it isn’t all bad news. Considering the huge economic and political uncertainty of the last 12 months, the market’s relative resilience is a testament to its strong foundations. This should continue to support a baseline of activity in the months ahead. Despite the lack of supply, demand from buyers will be supported by appetite for low mortgage rates and an expanding range of products.”