The number of first-time buyers (FTBs) completing mortgages fell in March by 2.4 per cent, compared to the same period the previous year, according to UK Finance’s recent a Mortgage Trends report.
As many as 28,800 FTB mortgages were completed in March, while 16,810 new homeowner remortgages were made with additional borrowing. This is a 9.1 per cent increase in the last year, according to the report.
This also comes after Moneyfacts, a financial comparison group, found that an increasing number of UK homeowners were likely to consider remortgaging by late 2019 with one of the main motivations for remortgaging being that borrowers were concerned that they were likely to face higher interest rates when old fixed-rate mortgages expired.
Buy-to-let activity slows
The report claimed that “Activity continues to contract due to tax and regulatory changes”, referencing the scrapping of mortgage interest tax relief and higher Stamp Duty payments in recent years as the reason for the slowdown in the buy-to-let sector.
UK Finance estimated that there were 5,000 new buy-to-let purchase mortgages completed in March, a decline of 9.1 per cent in the last year alone. In contrast, remortgages in the buy-to-let sector increased by 3.9 per cent in 2018.
The report noted that as buy-to-let activity showed signs of weakness, remortgaging activity was in its twelfth month of growth. It remarked that numerous fixed-rate deals were coming to an end and borrowers were opting to remortgage, “to lock into attractive rates.”
High value in new lending
News of the slowdown in buy-to-let activity and the rise in remortgaging came alongside data claiming that the value of residential mortgage loans remained significant in value. UK finance estimated that first-time buyer loans were worth a total of £4.7 billion in March.
UK Finance also estimated that the loan-to-value ratio for FTBs had fallen slightly by 0.2 per cent in March, but that the value of loans as a proportion of property value was as high as 76.1 per cent.
The typical size of an FTB loan was estimated to have also fallen slightly in March, by 0.5 per cent in the last year – FTBs are expected to have loans worth as much as £163,662 on average in that month, according to UK Finance.