Mortgage lending fell last month as the housing market has appeared to settle down.
The high cost of property, extra tax demands and potential restrictions on the private rented sector means that demand has dropped for landlords, with concern that many will sell their buy-to-let properties. 42,613 loans were given out for house purchases in February, which is down from 44,142 in January, and lower than the 44,678 recorded last year. The average new loan increased from from £180,900 in February 2016 to £185,800 as house prices continue to steadily rise.
The Affect of Buy-to-Let Taxes
The slow down in mortgage lending has been attributed to the fall out from the stamp duty surcharge applied to buy-to-let properties in April last year. The lower demand has resulted in a slower growth in house prices, however due to a shortage in properties, prices are unlikely to fall. That said, economists predict that house price growth will be limited this year. Inflation is rising faster than wages which will limit potential buyers’ ability to buy, but record low inflation rates will help to make mortgages more affordable.
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