The UK housing market continued to slow last month as reflected by a drop in new mortgage lending, with many buy-to-let landlords opting to “maintain the size of their portfolios”, rather than add to them, according to Foundation Home Loans.
The number of new mortgages approved for new house purchases dropped by 4.3% in July to 39,584 compared with the same month a year ago, industry body UK Finance said last week.
Overall, gross mortgage lending increased by 7.6% year-on-year, to £24.6bn in July, fuelled primarily by remortgaging as borrowers, including buy-to-let landlords, locked into attractive deals in anticipation of the recent base rate rise.
Jeff Knight, marketing director for Foundation Home Loans, commented: “The anticipation of a rate rise certainly would have encouraged a spike in activity, and while the purchase market is still less inflated – particularly for first-time buyers – it’s remortaging activity that is helping to maintain momentum and overall growth.
“This is certainly the case in buy-to-let as landlords choose to maintain the size of their portfolios, waiting for a more opportune time to build on it.”
But separate research suggests that rather than ‘maintain’ the size of their existing portfolios, many buy-to-let landlords are actually selling up.
Official data from the Ministry of Housing report shows that about 3,800 buy-to-let properties are being sold by landlords each month, as mortgage interest relief changes continue to have a negative impact on the market.