Mortgage lending grew by one-fifth over the last twelve months as the number of first time buyers, people moving homes, buy-to-let investors and remortgages all grew according to the Council of Mortgage Lenders (CML).
In total, £8.7bn was taken out for new mortgages in February 2016, up 21 per cent on last year, while another £6bn was dished out to those taking advantage of record low interest rates by remortgaging. The CML said that the level of lending was the highest in the month of February since 2007.
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The spike in activity in the buy to let sector, which recorded a 67 per cent jump in the value of new new loans, was put down to people rushing to beat the latest tax changes, including a three per cent stamp duty surcharge, which came into effect on 1 April 2016.
The average value of loans taken out by first time buyers came in at £129,000, with mortgage repayments representing 18.1 per cent of gross household income for new homeowners.
Paul Smee, director general of the CML, said:
In 2016, there have been substantial increases in house purchase and remortgage activity year-on-year. This reflects the sluggish market in early 2015, perhaps driven by election uncertainties.
Buy-to-let has also seen substantial year-on-year increases, with particularly strong growth in remortgaging, a pattern which we have seen in the buy-to-let sector the past six months. Activity has been boosted by landlords seeking to complete purchases before tax changes in April. We do not expect activity to show such strong year-on-year growth later in the year.
Separate data released by the Bank of England this morning also showed that demand for mortgages increased over the the first quarter of the year, though, “demand for buy-to-let lending was expected to fall significantly,” in the second quarter according to the Bank.