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Home-owner house purchase and buy-to-let lending grew in July

12 Sep 13

Home-owner house purchase and buy-to-let lending grew in July

Gross UK mortgage lending rose 12% in July to £16.7 billion, up from £14.9 billion in June and 29% on last July. Survey results published by the Council of Mortgage Lenders today show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.

The CML data (which, as of this month, includes buy-to-let) shows:

  • Total home-owner house purchase lending continued to grow, up 9% on June and 21% on July last year.
  • First-time buyers took out 25,300 loans in July, an increase of 5% on June and of 41% compared to July 2012.
  • Home movers took out 32,000 loans, an increase of 12% compared to June and up 9% on July last year.
  • Home-owner remortgage lending continued to pick up compared to July 2012 and recent months, although the £3.8bn advanced remains subdued compared to historical volumes.  
  • Total buy-to-let loans advanced increased to 15,200 in July, up 12% compared to June.
  • Within this, 7,600 buy-to-let loans in July were for house purchase, up by 7% compared to June.
  • In contrast to the picture in the home-owner market, buy-to-let remortgage lending grew more strongly than house purchase, increasing by 24% compared to June to £1.1bn. 

Lending for home-owner house purchase

Total home-owner house purchase loans (both movers and first-time buyers) continued to show the resilience and growth seen throughout 2013. 57,400 house purchase loans were advanced in July, an increase of 9% on June and up by 21% on July last year. These loans had a total value of £9.1bn, which was an increase of 12% on June and 23% compared to July last year. 

Table 1: Loans for house purchase and remortgage

  Number of house
purchase loans
Value of house
purchase loans, £m
Number of
remortgage loans
Value of remortgage
loans, £m
July
2013
57,400 9,100 27,000 3,800
Change from
June 2013
8.9% 12.3% 5.5% 8.6%
Change from
July 2012
21.1% 23.0% 7.6% 15.2%

Lending to first-time buyers

The strong growth in lending to first-time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first-time buyers, worth £3.5bn. By value, first-time buyer lending was 6% up on June and 46% up on July last year. 

The typical first-time buyer loan size stayed almost unchanged from June at £117,038, while average first-time buyer household income increased to £36,142 from £35,873 in June.

Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first-time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments (capital and interest) accounted for 19.2% of income, down from 19.3% in June.

Table 2: First-time buyers, lending and affordability

  Number of loans Value of loans £m Average loan to value Average income multiple Proportion of income spent on interest payments Proportion of income spent on capital and interest payments
July
2013
25,300 3,500 82% 3.31 11.8% 19.2%
Change from
June 2013
5.4% 6.1% 80% 3.33 12.1% 19.3%
Change from
July 2012
40.6% 45.8% 81% 3.24 13.7% 20.0%

Lending to home movers

Lending to home movers showed strong growth in July, with 32,000 loans advanced - up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6bn, an increase of 17% compared to June and 12% compared to July last year.

The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.

Table 3: Home movers, lending and affordability

  Number of loans Value of loans £m Average loan to value Average income multiple Proportion of income spent on interest payments Proportion of income spent on capital and interest payments
July
2013
32,000 5,600 70% 2.92 8.8% 18.3%
Change from
June 2013
11.9% 16.7% 70% 2.91 9.0% 18.2%
Change from
July 2012
9.2% 12.0% 69% 2.89 10.2% 19.3%

Lending to home owners for remortgage

Lending to home-owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8bn was advanced in July to home-owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.

Remortgage activity reported by CML is likely to increase in the coming months - Bank of England approvals data showed a 40% increase in July.  

Lending for buy-to-let

Lending for buy-to-let has continued to follow an upward trend, similar to the market overall. 15,200 buy-to-let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.

Lending for buy-to-let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.

Table 4: Loans for buy-to-let house purchase and remortgage

  Number of BTL house
purchase loans
Value of BTL house
purchase loans, £m
Number of BTL 
remortgage loans
Value of BTL remortgage
loans, £m
July
2013
7,600 900 7,200 1,100
Change from
June 2013
6.7% 12.5% 13.4% 23.6%

Lending for buy-to-let remortgage

There was strong growth in buy-to-let remortgage lending which increased by 24% in July compared to June, a value of £1.1bn. This equated to 7,200 loans in July for buy-to-let remortgage in total, an increase by 13.4% on June 2013.

Paul Smee, director general of the CML, commented:  

"The notable feature is the catch-up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing."

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 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey for all home-owner mortgage data. Buy-to-let data is sourced from a sample of CML members and has been grossed to estimate the industry total. The CML began collecting monthly data in January 2013 and will from now on report monthly buy-to-let data in this press releases, alongside our home owner house purchase data.  

Buy-to-let gross advances

 Period Month Gross advances in period Gross advances in period House purchase House purchase Remortgage Remortgage Other Other
    number £m number £m number £m number £m
2013 Jan 12,000 1,500 6,330 690 5,540 710 150 20
  Feb 10,800 1,300 5,730 610 4,890 630 130 20
  Mar 10,700 1,400 5,670 600 4,930 660 130 20
  Apr 11,700 1,500 5,850 650 5,720 780 170 30
  May 14,600 1,800 7,460 840 6,940 930 210 30
  Jun 13,600 1,800 7,120 800 6,350 890 190 30
  Jul 15,200 2,000 7,600 900 7,200 1,100 350 30

 

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 August 2013 data will be released on Friday 11 October 2013.

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Name: Gareth Hill
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