Mortgage advances to people buying a home dived by nearly 10 per cent in April but there was a steep jump in lending to investment landlords, figures showed today.
A total of £8.2bn was advanced for house purchase during the month, down from £8.9bn in April last year, according to the Council of Mortgage Lenders.
But the group said advances were broadly unchanged compared with March, and it expects lending levels to pick up coming forward.
Anecdotal evidence suggests many buyers and sellers adopted a ‘wait and see’ approach in the run up to the General Election, leading to lower activity levels in April.
Paul Smee, director general of the CML, said: “House purchase lending in April was relatively subdued compared to last year, but similar to activity in March.
“The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses.”
But while advances to homeowners were subdued, buy-to-let lending surged by 22 per cent year-on-year, with a total of £1.1bn advanced to investment landlords.
April was the first month in which people were able to take advantage of new pension rules, enabling them to unlock their retirement savings in one go.
Commentators had previously predicted the change would lead to a surge in buy-to-let landlords, as people reinvested their pension pots in property.
There was also a steep jump in the number of investment landlords who were remortgaging in April, with a total of £1.4bn lent to those who were switching to a new deal – 40 per cent more than 12 months earlier.
Within the total for lending to people buying a home, advances to both first-time buyers and home movers fell by 8 per cent year-on-year, while the number of homeowners remortgaging dipped by 2 per cent.
But there was an increase in both the amount first-time buyers borrowed and the income multiples they were advanced during the month.
The typical person taking their first step on the property ladder borrowed £125,545, up from £120,000 in April last year, which represented 3.37 times their income.
Meanwhile, a combination of higher salaries and lower interest rates meant the proportion of their income they had to spend on mortgage interest each month dropped to 10.3 per cent, down from 11.6 per cent 12 months earlier.
The group said first-time buyers were now spending a lower level of their income servicing their mortgage than at any time since it first started tracking the measure in 2005.
NetRent Mortgages is a whole of market broker, which means they have access to all the current BTL mortgage and remortgage products.
If you would like to be kept up to date with Private Rented Sector news and views please visit our Facebook page or our Twitter page or complete and send the form below to receive our FREE email newsletters: