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House purchase lending in Northern Ireland rises in third quarter, down on 2011

26 Nov 12

House purchase lending in Northern Ireland rises in third quarter, down on 2011

The number of loans advanced for house purchase reached the highest quarterly total for the year but remained lower than the same period last year, according to new figures released today by the Council of Mortgage Lenders in Northern Ireland.

In the last 3 months, a total of 2,300 loans were taken out for house purchase in Northern Ireland, a 21% increase on the second quarter but down by 4% compared to the third quarter last year. This rate of growth outstripped that shown in the UK overall where house purchase loans jumped by 16%.

By value, £210 million was advanced for house purchase loans up from £170 million in the previous quarter.

Chart 1: House Purchase lending in Northern Ireland, number of loans advances, and house purchase lending in Northern Ireland as a proportion of the UK total (1 year moving average)

Chart 1 - Northern Ireland q3 2012

Source: CML regulated mortgage survey

Driving this increase was a boost in the number of both first-time buyers and home movers.

A total of 1,300 first-time buyers bought their first home in Northern Ireland in the third quarter, up from 1,100 loans in the second quarter (a quarterly increase of 18%) but unchanged from the same period last year. By value, first-time buyers borrowed £100 million, up from £80 million in the second quarter but down from the £110 million advanced in the third quarter last year.

First-time buyers in Northern Ireland typically put down a deposit of 17% in the third quarter – slightly less than the second quarter at 19% and lower than the UK at 20%.

Other measures of first-time buyer affordability in Northern Ireland remained favourable compared to the rest of the UK. First-time buyers in Northern Ireland borrowed an average of 2.93 times their income in the third quarter compared to 3.25 in the UK, while mortgage payments typically consumed 19.6% of income. This represented a small increase compared to the second quarter but remained lower than the 20.1% in the UK.

A total of 1,000 first-time buyers in Northern Ireland bought properties valued at less than £125,000 – below the threshold for paying stamp duty. Reflecting the reduction in property values in Northern Ireland, this represented 77% of all first-time buyers compared to around 40% in the UK.

Chart 2: First-time buyers number of loans and average LTV, Northern Ireland

Chart 2 - Northern Ireland q3 2012Source: CML regulated mortgage survey

An increase in home movers in the third quarter also contributed to the rise in house purchase lending. There were 1,000 loans advanced to home movers in the quarter, up from 900 in the second quarter but down slightly from 1,100 loans advanced in the same quarter last year.

By value, £110 million was advanced to home movers in the quarter compared to £90 million in the second quarter.

Chart 3: Year-on-year percentage change in remortgage lending: Northern Ireland and the UK

Chart 3 - Northern Ireland q3 2012Source: CML regulated mortgage survey

Reflecting similar trends to the UK overall, remortgage lending fell in the third quarter in Northern Ireland. A total of £100 million was advanced to borrowers remortaging, down from £120 million in the second quarter, and £180  million at the same time last year.

Derek Wilson, chair of the CML in Northern Ireland, commented:

"While house prices have fallen further in Northern Ireland than the rest of the UK, this has benefitted those entering the market, with lower entry costs enabling more first-time buyers to take their first step onto the property ladder.

"Even though house purchase lending was slow compared to the same period last year, this year’s quarter-on-quarter results show that there are some signs of resilience emerging from the market."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.2 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. Data for the fourth quarter of 2012 will be released on Tuesday 26 February 2013

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