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First-time buyer mortgage lending increased in the second quarter of this year but remortgaging and buy-to-let experienced a decline.

Data released today by the Bank of England revealed the outstanding value of all residential loans continued on its upward trajectory, rising in Quarter Two (Q2) to £1,417.2 billion which is 3.8% higher than Q2 last year.

According to quarterly statistics, based on the lending activity of over 300 lenders and administrators, new commitments – which are loans agreed to advance in coming months – were at their highest level since the first quarter of 2008.

First-time buyers

There was also an increase in the amount of lending to first-time buyers and the proportion of high loan-to-income (LTI) finance has increased during the quarter too. High LTI lending was described as loans above four times the value of the annual income for a single buyer or three times the annual income for joint buyers.

However, the overall proportion of buy-to-let and remortgaging loans have decreased since the last quarter, the data revealed.

As a proportion of new lending, remortgaging accounted for 30.8% – a fall of 2% on the previous quarter. Meanwhile, the share of new lending for which buy-to-let accounted was also in decline this quarter, down to 13.1%.

Tax changes hitting buy-to-let

Ross Boyd, founder of mortgage platform, blamed the tough new rules facing landlords on the lull in buy-to-let.

He said: “Where homeowners tread, landlords are continuing to choose not to follow. For investors it’s more of the same, with the decline in buy-to-let lending since the first quarter firmly against the run of play.

“It’s more evidence of a slowdown precipitated by hostile tax changes in recent years that have left landlords licking their wounds.”

He added: “Traditional homeowners, though, are not feeling the pinch quite so much as arrears continue to fall. It’s yet another sign of consumer confidence, even if it’s not totally surprising with rates still on the floor by historic standards.”

Source: Mortgage Finance Gazette

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