The latest industry figures point to a fall in the number of first time buyer mortgage completions for the first time since 2018, while the market for buy to let lending continues to contract.
Indeed, the data from the industry body UK Finance shows a 2.4% fall year on year, with 28,800 new first time buyer mortgages completed – the first fall in some eight months.
The data also shows that the number of home mover mortgage completions fell by 6% when compared with the same month last year, with 25,280 in total. Meanwhile, the number of remortgages grew for the twelfth successive month following a rise of 4.1% in March.
The data also shows that there were 5,000 new mortgages purchased on buy to let properties, down 9.1% year on year, however the buy to let remortgage market fared better, growing for the second month in a row with an increase of 3.9%.
According to Dilpreet Bhagrath, mortgage expert at Trussle, the practice of making mortgages fairer and more straightforward to obtain remains a challenge. ‘Getting a mortgage is often one of the biggest financial and emotional commitments a person will make in their lives, and ensuring the Government and the industry is supporting young people as they take this step is crucial,’ said Bhagrath.
Additionally, Simon Heawood, chief executive officer of Bricklane predicts that the current downward trajectory of buy to let lending will continue for the foreseeable future. ‘A swathe of tax penalties in recent years means more and more part-time landlords are deciding that buy to let just isn’t worth their while,’ he said.
‘The upcoming tenant fees ban also appears to be the opening salvo in a push to professionalise the rental market. Those who remain can expect to face increased costs and hassle,’ he pointed out.
‘While individual buy to let is less and less viable, investors remain enthusiastic about residential property as an asset class, particularly with low interest rates and stock market turbulence. We expect to see increasing demand for options that provide a tax-efficient, hassle-free alternative to buy to let,’ he added.
Adrian Moloney, sales director at OneSavings Bank, believes that the role of Brexit cannot be downplayed, suggesting that it is clearly having an adverse effect on the housing market, and the buy to let market is also seeing the consequences. ‘Political and economic uncertainty is accentuating the structural changes we have seen in the buy to let space, and many landlords are sitting on their hands ahead of making long term investment decisions,’ he said.
‘Whether more will be tempted into purchase decisions by falling house prices remains to be seen; for committed landlords with capital, falling house prices in London and the South East could provide a buying opportunity, with higher yields, in spite of the uncertain political backdrop,’ he explained.
‘Nonetheless, remortgaging continues to be the key source of activity, as landlords seek to protect their margins in the face of higher taxation and running costs, locking into the financial security of longer term fixed rates,’ he added.