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Full-year data shows strong lending to first-time buyers


Published: 19 February 2015 | Author: Bernard Clarke

Mortgage lending grew robustly last year, according to data we published this week – with activity by first-time buyers and buy-to-let investors leading the way.

  • Data we published earlier this week showed that first-time buyers took out 311,500 loans in 2014, 15% more than in the preceding year. At £45 billion, the value of their loans was 24% higher than in 2013.
  • That meant that lending to first-time buyers last year was at its highest for seven years, with the number of loans exceeding 300,000 for the first time since 2007. Activity at that level represents a significant increase from the period 2008-11 when, in four successive years, the number of first-time buyer loans was lower than 200,000.
  • Overall, first-time buyers accounted for 46% of loans for house purchase last year, the highest proportion since 1999. At that level, first-time buyer activity was similar to a generation ago, when this group of buyers took out around half of all home purchase loans.
  • Strong first-time buyer activity last year coincided with robust growth in the buy-to-let sector. Lenders advanced 197,700 buy-to-let loans last year, 23% more than in 2013, and the value of buy-to-let lending totalled £27.4 billion, up 32% year-on-year.
  • Buy-to-let lending last year was at its strongest since 2008, when there 225,300 loans, worth £28.5 billion. It was, however, still some way below its peak of 346,000 loans, worth £45.7 billion, in 2007.
  • Home movers took out 365,400 loans last year, worth £67.6 billion. That represented growth of 8% by volume and 16% by value compared to 2013. Borrowing by movers last year was at its highest since 2007, but still some way below former peaks (the number of loans by movers totalled more than 800,000 in the years 2002-04, with lending worth £108.1 billion in 2006.
  • The number of loans for all house purchase totalled 676,900 last year, with a value of £112.8 billion, up 11% by volume and 19% by value on 2013. Lending for house purchase last year was also at its highest since 2007.
  • In contrast, remortgaging remained subdued last year. There were 303,100 loans for remortgaging last year, 6% fewer than in 2013. By value, remortgaging edged 2% higher in 2014, to £46 billion.
  • Overall, the mortgage market adjusted well to the introduction of major regulatory reform last year, and remained stable throughout. Total lending increased from £178.8 billion in 2013 to £204.4 billion last year, up by 14%. However, lending softened in the final months of the year.
  • We have forecast  that this broad pattern will continue in 2015, with lending predicted to rise to £222 billion, or by 9%. There will be challenges for the industry this year as it works on implementation of the European mortgage directive and adjusts to the outcome of a general election, which could see the launch of a number of new housing market initiatives. But the industry is stronger than a year ago, and well placed to meet the challenges ahead.