Remortgage figures may be misleading, claims UK Finance

17th July 2017

Data from UK Finance data shows that mortgage lending rose significantly across the board in May.

Homeowner remortgage activity was up 10% in value and 9% in volume compared with April figures. Compared with a year ago, remortgage lending was up 12% in value and 7% in volume.

Home buyers borrowed £10.8 billion, up 10% on April and 16% on May 2016. This equated to 58,400 loans, up 12% on April and 10% on May 2016. Within this figure, first-time buyers borrowed £4.7 billion, up 12% on April and on May 2016. First-time buyers took out 29,200 loans, up 13% month-on-month and 8% year-on-year.

Home movers borrowed £6.2 billion, up 11% on April and 22% year-on-year. This equated to 29,200 loans, up 11% month-on-month and 13% compared with a year ago.

Gross buy-to-let totalled £2.9 billion in May, up 16% on April and 12% compared to May last year. This equated to 19,100 loans, a 16% increase on April and 15% on a year ago. Buy-to-let activity was driven by remortgage lending, which accounted for more than two-thirds of total lending.

Paul Smee, head of mortgages at UK Finance, said: “The apparent strong growth in mortgage lending in May might flatter to deceive. The relative weakness in lending last May following the stamp duty changes makes comparisons misleading.

“The seasonally adjusted data shows a less buoyant lending picture, with homebuying activity remaining relatively unchanged month-on-month and remortgage lending gradually decreasing each month since January.

“In the summer months, we expect homebuying activity to continue with an even split between first-time buyers and home movers, but in greater numbers than in the winter months. We expect buy-to-let to remain subdued compared to its recent 2015 peak.”

*2 year fixed with TSB 1.09% then 3.59% - APRC is 3.3% Max LTV is 60%. Quoted on 27th May 2020.