There was a large fall in the number of loans for house purchase in February, according to the latest Mortgage Monitor from e.surv chartered surveyors.
It reported there were 46,499 purchase loans in February as the rush of first-time buyers trying to beat the stamp duty deadline came to end. This represents a 21% decrease from January, when purchase approvals were inflated to a two-year high of 58,728 by a glut of new buyers trying to complete before the end of the tax break on 24th March.
E.surv said first-time buyer numbers fell to their lowest level since July last year, indicating the first-timer market looks set to enter a trough following artificially strong months in December and January. Loans for purchases under £250,000, the threshold for the stamp duty exemption (and also typical first-timer property), fell by almost ten thousand from 43,459 in January to 33,944 in February.
The average loan-to-value (LTV) fell for the third consecutive month to 61%. Loans to borrowers with small deposits of under 15% fell to their lowest since July 2011. There were only 5,533 such loans in February, down from 7,870 in January, reflecting the decline in first time buyer numbers, but also the greater unwillingness from lenders to grant loans to lower income borrowers.
The sharp decline in first-time buyers dragged the total number of house purchase approvals down to their lowest level since May last year. It is the first time monthly approvals have fallen since September last year. Additionally, the pace of year-on-year growth declined dramatically from 29.6% in January to 1.6% in February , its slowest level for seven months.
Richard Sexton, director of e.surv, said: “The stampede of first time buyers rushing to beat the stamp duty deadline bloated the January figures out of all recognition. They created an artificial spike in approvals