The housing market slowed down in October, with the number of mortgages granted to home movers down 20% on a year ago, according to data from the Council of Mortgage Lenders.
There was also a fall in the buy-to-let market, where activity has been hit by tax changes. But the lending market was bolstered by the amount of remortgage activity which hit its highest level since January 2009.
The data was seized upon as evidence that the EU referendum in June had dented confidence and a sign that home owners were responding to the Bank of England’s rate cut to 0.25% after the vote for Brexit.
The CML said the amount borrowers were paying as a percentage of their household income to service repayments fell to a record low for both first-time buyers and home movers at 17.6%.
Paul Smee, its director general, said that while buy-to-let lending was weak, the remortgage market was strong. “This appears to be linked to borrowers taking advantage of the repricing of mortgages following the base rate cut,” he said.
About 28,900 loans were granted to home movers in October, a 20% decrease on a year ago and 8% down month on month. Home movers borrowed £5.9bn, down 9% on a the previous month and 18% on a year ago.
The figures followed last month’s warning from the Royal Institution of Chartered Surveyors that number of properties on the market fell in October while the number of buyers rose.
Remortgage activity totalled £6.1bn, up 11% on September and 7% on a year ago. There was also a rise in the number of loans to 34,700, up 10% month on month and 5% on a year ago.
Andy Knee, the chief executive of legal services provider LMS, said: “October was a strong month for the remortgage market, with activity hitting an eight-year high, while the rest of the market stood still. The ramifications of June’s referendum result are hitting home.
“Homeowners are taking advantage of low rates to secure reduced monthly repayments.”
Activity in the buy-to-let market – which is being monitored by the Bank of England – has been slowing as a result of the 3% stamp duty surcharge on second properties introduced in April.
Lending increased 7% month on month to £3bn, but remains 21% lower year on year. Nearly two-thirds of buy-to-let loans were remortgages rather than for house purchases.
