Mortgage lending revisits 2007 peak thanks to buy-to-let spike

Home buyers borrowed £13.8bn in March, according to the Council of Mortgage Lenders, the largest amount taken out in a monthly period for house purchase since June 2014 and the most borrowed for house purchase since August 2007.

The 69,800 loans being a 45% increase on the previous month and 38% on the same month last year.

In contrast, first-time buyers borrowed £4.5bn, up 32% on February and 29% on March last year, and more in line with levels seen in December.

Singling out gross buy-to-let lending, it surged to its highest quarterly level by volume since the third quarter of 2007 and the most amount borrowed in a quarter since 2006.

Despite the inflation of the buy-to-let surge, total lending for the quarter of £30.9bn was down 9% on the preceding quarter, and up 33% year-on-year.

“Activity was distorted in March due to a rush to beat the introduction of changes to stamp duty on second properties in April, alongside the seasonal uptick in activity before Easter," said Paul Smee, director general of the CML.

"While the increases are substantial, these supercharged levels of activity are likely to be temporary and will fall back over the summer months.”

Income trends

The amount first-time buyers spend of their monthly gross income to service capital and interest repayments was 18.0%, which was the lowest level since the CML began tracking this metric in 2005, noted CML economist Mohammad Jamei.

He also pointed out that home movers were generally paying at record low proportions of income, at 17.8%, down from 18.1% in February and March last year, and much lower than the recent peak of 23.8% in December 2007.