CML data shows a stable but subdued mortgage market in 2010
11 Feb 11
New data from the Council of Mortgage Lenders shows that mortgage lending stabilised in 2010 following very sharp falls in 2008 and 2009.
There were 529,300 loans advanced for house purchase in 2010, worth £77.1 billion, an increase of 3% by volume and 11% by value compared with 2009. Loans for remortgage were at a 13-year low, following the global financial crisis. They totalled 313,200, worth £39.3 billion, in 2010, down 23% by volume and 24% by value from 2009.
House purchase lending in 2010 accounted for 57% of all mortgage activity, up 9 percentage points from 2009, and loans for remortgage accounted for 29%, down 7 percentage points from 2009.
Table 1: Loans for house purchase and remortgage
Value of house
|Number of |
|Value of house |
|Number of |
|Value of |
|Change from November 2010||-4%||-5%||-16%||-17%|
|Change from December 2009||-37%||-33%||-16%||-17%|
In December, the number of house purchase loans advanced totalled 39,900 (worth £5.7 billion), down 4% by volume and 5% by value from November and down 37% by volume and 33% by value from December 2009. 23,400 loans for remortgage (worth £2.9 billion) were advanced in the month, down 16% by volume and 17% by value compared to the previous month and to December 2009. The drop in house purchase lending from December 2009 can be explained by the distortionary effects arising from the artificial boost in activity in December 2009 to beat the stamp duty holiday deadline.
Table 2: First-time buyers, lending and affordability
|Change from November 2010||-3%||-6%||79%||3.22||13.0%|
|Change from December 2009||-42%||-41%||75%||3.22||14.0%|
There were 14,500 loans to first-time buyers advanced in December, worth £1.7 billion. This was down 3% by number and 6% by value from November and down 42% by number and 41% by value from the previous December. The typical first-time buyer in December 2010 had a deposit of 23%, a slight tightening in criteria from 21% in November. They also borrowed 3.23 times their income and spent 12.9% of their income on interest payments, the lowest proportion since February 2004. For 2010 as a whole, first-time buyers took out 194,600 loans, worth £23.3 billion, down 1% in number and up 6% in value from 2009.
Table 3: Home movers, lending and affordability
Change from November 2010
Change from December 2009
Lending to home movers also fell in December. The number of loans advanced fell by 4% from November to 25,400 and the value fell by 7% to £4 billion. Home-mover loans were also down 33% by number and 29% by value from December 2009. Home movers in December borrowed on average 68% of the value of their property, unchanged from November. They spent an average 9.5% of their income on interest payments, also unchanged from November.
Since 2007, there has been a clear shift away from interest-only mortgages, in particular for first-time buyers. In December only 6% of first-time buyer loans were interest only, compared with pre-2007 when around 30% of all mortgages to first-time buyers were interest only.
Michael Coogan, Director general of the CML, commented:
"2010 was about the mortgage market continuing to adapt to the post-credit crunch environment, and the full year data shows that the lending industry is now on a more stable footing but at historically low levels of activity. House purchase lending held up, and shows the market is open for business. However, it is still not serving all customer groups that may want to borrow, in particular those without a significant deposit.
"Access to funding for lenders is expected to stay under pressure this year, but it will now be matched by lower consumer demand due to the economic backdrop and a range of uncertainties which will impact the timing of borrowing decisions. We conclude that this will lead to gross lending levels in 2011 staying flat compared to 2010, with downside risks."
Notes to editors
1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion.
2. Source: CML Regulated Mortgage Survey
3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.
4. The January 2011 data will be released on Friday 11 March 2011.
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- Name: Sue Anderson
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- Name: Bernard Clarke
- Tel: 020 7438 8923