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UK lending continues upward trend in April


Published: 17 June 2014 | Author: Bernard Clarke

Data we released earlier this month showed that lending for house purchase in April was continuing to grow strongly. Advances were up year-on-year by 33% in volume and 47% by value.

First-time buyers remain a key driver of the UK market. They took out 24,500 loans in April, 6,600 more than in the same month last year. Those loans were worth £3.5 billion, 52% more than in April 2013.

Affordability remains a key issue, as commentators continue to debate whether or not the UK is approaching a housing market bubble. But first-time buyers in April did not see any significant change in affordability.  Their typical loan size was £121,500, up from £118,750 in March, but was supported by an average household income of £37,000, up from £35,704 in the previous month.

More widespread availability of higher loan-to-value mortgages, and the high proportion of first-time buyers taking them out meant that the average loan-to-value ratio for this group rose to 83%, up from 80% in March.  Low interest rates have helped ensure that mortgage commitments account for only 19.4% of the gross income of first-time buyers, up from 19.2% in March but much lower than the average of 24% seen in 2007.

Lending to movers also showed growth year-on-year with the number of loans advanced totalling 28,700, 30% higher than a year previously. Mover loans totalled £5.3 billion in value, up 47% year-on-year. Remortgaging, however, saw no increase in number of loans, which totalled 26,300.  But the value of remortgaging was £4 billion, an increase of 18% on April last year.

Buy-to-let lending saw a sizeable year-on-year increase, with the total number of loans up 43% and their value 57% higher, at £2.2 billion.