Buy-to-let home purchases down 19% year-on-year

There were 5,400 new buy-to-let home purchase mortgages completed in June, some 19.4% fewer than in the same month a year earlier, UK Finance’s Mortgage Trends Update for June has found.

By value this was £0.8bn of lending in the month, 11.1% down year-on-year. There were 12,600 new buy-to-let remortgages completed in  June, the same as June 2017. By value this was £2.0bn of lending in the month, the same year-on-year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Remortgaging numbers were strong in June, both on residential and buy-to-let mortgages, as borrowers rightly worried about an impending rate rise.

“Now that rates have gone up this month, we expect to see remortgaging continue to be popular as those who haven’t got around to doing so finally take the plunge.

“With most lenders pricing in the base rate rise before it actually happened, the good news for borrowers is that fixes in particular are still very competitive. Now is a good time to fix – whether it’s for two, five or even 10 years – protecting borrowers from any future rate rises.

“Buy-to-let continues to be a challenge with the harsher tax and regulatory environment putting off novice investors. But there are still seasoned landlords committed to the sector for whom it is business as usual.”

Jackie Bennett, director of mortgages at UK Finance, said: “Remortgaging continued to dominate in June with figures up 13% on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.

“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first time buyers and homemovers as customers adopted a ‘wait and see’ approach.

“House price inflation has moderated in recent months yet it still remains above earnings growth, and so affordability is still a challenge for would-be borrowers.

“And although the full impact has yet to be felt, tax and regulatory changes continue to bear down on borrowing activity in the buy-to-let purchase market.”

Mike Scott, chief property analyst at estate agent Yopa, said: “Since market activity has reduced for both buyers and sellers, we expect that there will be little impact on house prices, and 2018 will end with slightly fewer house sales than 2017, but with prices slightly higher.”


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