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Activity in February in particular has been driven largely by the impending increases to Stamp Duty Land Tax (SDLT) due to come into effect in April 2016. MAB witnessed its highest volume of new mortgage transactions to date with almost £1.2bn of new applications bring written during February. During March, momentum has eased a little as we approach the introduction of the new SDLT regime for second home buyers and buy-to-let investors. Last time in my commentary I discussed how we had seen a material increase in buy-to-let activity in the weeks following the Chancellor’s Autumn Statement, with the proportion of buy-to-let moving from circa 16% of transactional activity to 22% of business. Not surprisingly this has eased back in the last few weeks towards the former average of 16–17% and we envisage activity at or around this level in the short to medium term.
Natwest have continued their strong start to 2016 as our most frequently used lender, accounting for 16% of all applications in the first two months of trading in 2016 with Nationwide in 2nd place (13.8%), Halifax 3rd (12.1%) and Santander 4th (10.4%). The balance of our top ten most frequently used lenders witnesses TMW in 5th place (their highest ever usage with MAB at 5.7% - driven by the surge in landlord cases) ahead of Woolwich with 4.3%, BM Solutions 4.2%, Coventry/Godiva and Virgin Money both with 4.1% and TSB with 3.6%.
Once again mortgage product numbers increased in February to more than 17,500, of which, 12,500 were available via the broker channel – the highest numbers since March 2008.
We commented earlier about the increasing level of activity within the buy-to-let market, part of which will be constrained by a combination of tax change introductions - but we have also now seen proposals presented by the Prudential Regulation Authority around raising the underwriting assessment standards of buy-to-let mortgage applications applied by lenders.
These proposals will mean more consistent and tougher hurdles having to be applied by lenders in assessing applications within this sector. Should these proposals proceed to implementation (which is likely), activity may be further curbed within the buy-to-let sector as more applications would fail the increased scrutiny demanded of lenders by the regulator. This policy is set against a back drop of the treasury having concerns about the impact that the buy-to-let market could potentially have on financial stability of the wider UK economy – so these proposals are not unexpected and are, it seems, part of a concerted effort by both government and regulator to curb the growth in the sector.We also now know that the referendum vote to remain in, or opt out of the European Union is set for the 23rd June 2016 – the day of the MAB Conference. At this stage, it is too early to determine if borrowers are mindful to delay in any way any plans they may have to buy, move home or remortgage as a result of that event? Certainly, the last three months activity would suggest otherwise, but a significant proportion of recent activity has been fuelled by the financial gain to be enjoyed by borrowers who are buying a second home or buy-to-let property - avoiding additional SDLT that will become payable from next month.