The Council of Mortgage Lenders (CML) has reported that home buyers borrowed £8.4bn in January, down 28% on December and unchanged on January 2016.
This came to 45,700 loans, down 28% on December and 1% on January 2016.
At the same time, first-time buyers borrowed £3.6bn for home-owner house purchase, down 29% on December but up 9% on January 2016. They took out 22,600 loans, down 29% month-on-month but up 7% year-on-year.
Home movers borrowed £4.9bn, down 25% on December and 4% year-on-year. This equated to 23,000 loans, down 27% month-on-month and 7% compared to January 2016.
Meanwhile, home-owner remortgage activity was up 54% by value and 46% by volume on December. Compared to January 2016, remortgage lending was up 22% by value and 21% by volume.
Gross buy-to-let saw month-on-month increases, up 11% by value and 12% by volume. Compared to January 2016, both the number of loans and the amount borrowed decreased by 16%.
Looking on a seasonally adjusted basis, the month-on-month change in first-time buyer and home mover activity was minimal. First-time buyer lending increased 2% by value with the number of loans down 2% compared to December. There was growth by volume and by value year-on-year. The number of home mover loans remained unchanged month-on-month and the total amount borrowed increased by 3%, while year-on-year activity decreased slightly by value and by volume. Full seasonally and non-seasonally adjusted data is attached to this email.
Paul Smee, director general of the CML, said: “January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector. We expect a seasonal dip in activity in the winter months and this appears to be the case in January. However, the lull in moving activity appears stubbornly persistent, and we have commissioned research on the reasons why the number of transactions seems in secular decline.
“Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.”
The number of loans advanced for house purchase in January was at its lowest monthly level since February 2015; a near two year low.
The proportion of household income used to service capital and interest rates continued to be near historic lows this month for both first-time buyers and home movers both at 17.5%.
Affordability metrics for first-time buyers saw the typical loan size decrease from £136,000 in December to £132,400 in January. The average household income also decreased to £40,200 from £40,400. This meant the income multiple went from 3.57 to 3.53.
The number of loans advanced for buy-to-let was the second highest monthly level since the changes to stamp duty on second properties in April 2016, behind November 2016. This activity was driven by buy-to-let remortgage lending which took up over two thirds of total lending. The number of loans for buy-to-let house purchase advanced in January was at an eight month low in part due to the traditional seasonal dip in activity in the winter months.
By contrast, buy-to-let remortgage lending was at its highest monthly level, alongside November last year, since the stamp duty reform was introduced.