Home loans to first-time buyers soared by 26% in June, but buy-to-let lending remained subdued, according to trade body UK Finance.

What’s the latest?

Housing market activity picked up in June with mortgage advances to people buying a home soaring by 26%.

A total of £7.8bn was lent to home movers, the highest level for more than a year, according to UK Finance, the trade body for financial providers.

First-time buyers borrowed £5.9bn, also up 26% on May’s total, and 9% above the level seen in June last year.

But buy-to-let lending remained subdued, and the group warned it did not expect June’s jump in activity to continue.

Paul Smee, head of mortgages at UK Finance, said: “There are signs of a softening market and we are not anticipating that this performance will be sustained in the second half of 2017.

“A slightly lopsided market could well show some growth in house purchase lending but alongside reduced remortgage and buy-to-let activity.”Above: In Oxford, this bay-fronted four-bedroom Victorian mid-terrace house, arranged over four floors, is available for £835,000

Why is this happening?

Early summer is traditionally a buoyant period for the property market, so June’s increase in lending will in part be due to seasonal factors.

It may also reflect people returning to the market following the outcome of the General Election, although that is more likely to show through in July’s figures.

Buy-to-let lending remains subdued following a raft of tax hikes introduced by the Government, including a 3% stamp duty surcharge, reduction in mortgage interest tax relief and changes to the ‘wear and tear’ allowance.

Who does it affect?

The jump in house purchase activity is heartening news for people planning to buy a new home, as it suggests deals are still being done despite the ongoing shortage of homes for sale.

The proportion of income home buyers needed to pay their mortgage each month also remained close to historic lows for both first-time buyers and home movers at just over 17%.

But the low level of buy-to-let lending is a concern for those who are renting, as it suggests the shortage of homes to let will continue, forcing rents higher.Above: Keen to move to the Lake District? Here’s a three-bedroom detached house, with two additional annexes, in Bowness-On-Windermere, advertised on Zoopla for £800,000

Sounds interesting. What’s the background?

House price growth held steady in June with the average cost of a home rising by 0.8% during the month to £223,257.

The annual rate at which prices are rising was also broadly unchanged at 4.9%, according to HM Land Registry.

But there continued to be significant regional variations, with northern regions seeing the strongest growth.

Yorkshire and the Humber led the charge, with prices rising by 2.2% during the month, followed by the north east and north west, both at 1.9%, and the East Midlands at 1%.

By contrast, property values in London fell by 0.7%, while those in the east edged ahead by just 0.3%.

The south east and south west fared only slightly better with gains of 0.6% and 0.7% respectively.

Top 3 takeaways

  •  Housing market activity picked up in June with mortgage advances to buyers soaring by 26%
  •  A total of £7.8bn was lent to home movers, the highest level for more than a year
  •  First-time buyers borrowed £5.9bn, 26% up month-on-month, and 9% above the level seen in June last year

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