According to the figures, the number of approvals for remortgaging also dipped in May, to 46,700. Net mortgage borrowing by households fell to £3.1 billion in May, the smallest increase since April 2017.
However the annual growth rate for mortgage lending remained stable at 3.2%, and has now been around 3% since late 2016.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "The number of mortgage approvals for house purchase, which indicate at what level future lending will be, fell back slightly in May but remain broadly in line with the narrow range seen in previous years.
It shows that the mortgage market is trundling along quite steadily with no great shocks either way. This is reassuring as there is plenty of political and economic uncertainty, which is preying on people’s minds and creating a delay when it comes to making big decisions.
Lenders remain keen to lend and several have cut rates in recent weeks so mortgage rates are likely to remain low for a while yet, further supporting the market."
John Phillips, operations director at Just Mortgages and Spicerhaart said: “There is not a huge change here; net mortgage borrowing fell slightly, but the annual growth rate for mortgages has remained stable at 3.2%, which means it has now been steady at around 3% for almost three years. Approvals, however, were down for both house purchase and remortgaging, which could suggest that lending will fall over the next few months and growth may slow too.
There is no doubt that it has been a funny old few years for the mortgage market. Brexit has obviously had – and is still having – an impact, but I don’t think it is the only factor at play.
For many years now, borrowing costs have been very low, but wages have not been keeping pace with house prices, so while mortgages are affordable, deposits and stamp duty are not. Those who may have upsized in the past are now either remortgaging to borrow more and then extending, or just saving the money they would’ve used on stamp duty and investing it into their existing homes.
If the Government wants to get things moving again, they need to do something about the cost f moving. People are simply not prepared to throw thousands of pounds that could be sued to invest in a bigger home on stamp duty. Back in April, the House of Lords Committee on Intergenerational Fairness and Provision recommended changes to stamp duty because, they said it is ‘seriously distorting the market’ and I think they’re right. Until something is done about the crippling cost of stamp duty, the market will continue to struggle.”
Kevin Roberts, Director, Legal & General Mortgage Club, comments: “The government’s Help to Buy scheme has improved affordability for first-time buyers, and with mortgage lenders increasingly offering 95% loan-to-value products, they have unparalleled access to the finance they need. The low interest rate environment has also encouraged existing homeowners to remortgage onto longer fixed-term products – giving them certainty over their future repayment costs.
However, a mortgage is usually the biggest financial commitment an individual has in their lifetime – and this process shouldn’t be rushed. Seeking professional advice is a practical first step and can help individuals choose whether it is the right decision for them. Independent mortgage advisers will not only help find the protection needed, but with access to almost six times more products than available direct from lenders, they can source a product that meets your financial needs, too.”
