Mortgage lending dropped by 8% last month but was still flat year-on-year, Council of Mortgage Lenders figures have revealed.
Lending reached £18.2bn in February, down from £19.8bn in January but similar to £18.1bn in February last year.
John Eastgate, sales and marketing director of OneSavings Bank, welcomed the fall in transactions.
He said: “A nine-year high for gross mortgage lending in January proved that mortgage demand is effervescent, but given the record highs, some moderation was to be expected and is arguably welcomed.
“The Brexit effect and the base rate cut have driven mortgage rates to all-time lows, supporting mortgage activity, most prominently in remortgaging.
“While buy-to-let purchases have seen a dip since the changes to stamp duty costs last year, the sector has also seen a surge in demand from landlords refinancing to take advantage of low rates to reduce their costs.
“We should expect to see remortgage activity continue to drive lending levels in 2017 as a lack of supply and stretched affordability, will continue to subdue the purchase market.”
Mohammad Jamei, senior economist at the Council of Mortgage Lenders, delved into market conditions in more detail.
He said: “First-time buyers and customers who are remortgaging are driving total lending, while homemovers and buy-to-let remain weak.
“The weakness in homemovers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013.
“This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.”
Henry Woodcock, principal mortgage consultant at IRESS, reported a similar picture.
“Even though we’ve seen a decrease in lending from January, first-time buyer activity, supported by government schemes has still been strong, as has growth in remortgaging.
“Overall, average house prices are expected to grow modestly this year, however we’re likely to see significant regional variance.
“Growth will most likely be outside the cooling capital market and more in regional centres such as Birmingham and Manchester.”
Conditions are good for first-time buyers, said Jeremy Leaf, north London estate agent and a former RICS residential chairman and Mark Harris, chief executive of mortgage broker SPF Private Clients, says
Leaf said: “First-time buyers are taking advantage of more friendly purchasing conditions and in some cases taking the place of buy-to-let investors who have been squeezed by tighter tax and operational restrictions.”
Harris said: “Mortgage rates continue to look competitive and there is plenty to tempt those remortgaging, as well as first-time buyers with some good deals available at high loan-to-values.”