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First-time buyers in Wales up by almost a third in second quarter of 2014

27 Aug 14

First-time buyers in Wales up by almost a third in second quarter of 2014

New CML data on the characteristics of lending in Wales in the second quarter of 2014 show it remains driven primarily by lending for house purchase, with first-time buyers in particular showing strong year-on-year growth.

Quarterly highlights:

  • In the second quarter, there were 3,300 first-time buyer loans in Wales - 32% up on the previous quarter, and 27% up on Q2 2013. First-time buyers in the period borrowed £340 million - up 31% on the previous quarter and on Q2 2013.
  • There were 3,500 home-mover loans in the second quarter, up 17% on the previous quarter and 9% more than in Q2 2013. Total value of these loans was £440 million, up 16% on the first quarter and up 13% on the second quarter 2013.
  • Remortgage lending in the quarter declined in Wales compared to the previous quarter and the same quarter in 2013.

Lending for home-owner house purchase

House purchase lending to home-buyers increased quarter-on-quarter in Wales totalling 6,800 loans, up 24% compared to the first quarter and the value of these loans totalled £790 million, a rise of 23% on the first quarter. Compared to the second quarter of 2013, the number of loans increased by 17% and value of these loans increased by 23%.     

Chart 1: House purchase lending in Wales: Year-on-year % change in Wales compared and the UK

26.08.14 Wales house purchase

Source: CML

Lending to first-time buyers

First-time buyer affordability changed fractionally, with first-time buyers typically borrowing 3.23 times their gross income, which was less than the UK average of 3.46 and slightly changed from 3.24 in the first quarter. The typical loan size for first-time buyers was £99,000 in the second quarter, up from £98,000 in the previous quarter. The typical gross income of a first-time buyer household was £30,400 compared to £30,100 in the first quarter.

The relatively low level of interest rates saw first-time buyers' payment burden remaining relatively low in the second quarter at 18.2% of gross income being spent to cover capital and interest payments, a smaller proportion of income than the 19.4% UK average and slightly changed from 18.3% in the first quarter. 

Chart 2: Lending to FTBs in Wales, number of loans advanced, and lending to FTBs in Wales as a proportion of the UK total

 26.02.2014 Wales FTBs graph

Source: CML

Lending to home movers 

In the second quarter of 2014, lending to home movers showed similar growth patterns in Wales to first-time buyer lending although at a slower rate of growth. Home mover affordability changed fractionally, with home movers typically borrowing 2.82 times their gross income compared to 3.09 for the UK overall and 2.74 in the first quarter. The typical loan size for home movers was £117,900 in second quarter, up from £112,500 in the previous quarter. The typical gross household income for home movers was £42,240 in second quarter compared to £42,000 in first quarter.

Home movers' payment burden remained relatively low in Wales at 17.2% of gross income being spent to cover monthly capital and interest payments, less than the 18.7% UK average and 17.3% seen in the first quarter.

Lending to home owners for remortgage

Remortgage lending in Wales declined both quarter-on-quarter and year-on-year. Home-owner remortgage lending in the second quarter totalled 3,100 loans advanced in the period, which was a decrease of 9% on first quarter and down 18% on the second quarter 2013. These loans totalled £310m in value, a decrease of 11% quarter-on-quarter and down 14% compared to Q2 2013.

Chart 3: Remortgage lending in Wales compared to the UK, year-on-year % change

26.08.14 Wales remortgage

Source: CML

Peter Hughes, chair of CML Cymru, commented: 

“With new FCA mortgage market rules being introduced in this quarter, there was potential for a period of adjustment as the market adapts to the new rules, however, this does not seem to be the case in Wales. First-time buyers and home movers have shown substantial growth on the previous quarter and compared to this period last year. The affordability constraints are less in Wales compared to the UK overall, which suggests there are relatively favourable conditions for those looking to own a home.”

 

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 11.1 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 third quarter of 2014 will be released on Wednesday 26 November 2014.

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