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UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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Five take-away statistics from our second quarter mortgage lending data

Analysis

Published: 21 August 2015 | Author: Gareth Hill

Earlier this month, we published our detailed monthly lending data for the second quarter. It showed an increase in activity following a particularly slow start to the year. Here are five key trends emerging from the figures: 

1. Monthly repayment costs were the lowest since records began.

Competitive mortgage rates meant that in the second quarter both first-time buyers and movers were paying a record low proportion of their monthly household income to service the capital and interest rate repayments on their mortgages. The proportions were at their lowest level since the CML began tracking this data in 2005.

2. Remortgaging activity woke up!

After a subdued beginning to the year, remortgaging saw both a quarter-on-quarter and a year-on-year increase. This showed that borrowers were looking to lock into some off the most competitively priced mortgage deals we have ever seen, in advance of the prospect of an interest rate rise in the not-too-distant future.

3. House purchase borrowing came out of its winter seasonal slumber

Traditionally, lending levels are lower in the winter months, and that was exactly the pattern we saw this year. In the second quarter, both first-time buyers and movers  bounced back from underwhelming first-quarter levels of activity to show a renewed appetite for borrowing. Despite this, however, house purchase lending in the quarter was lower than the high levels we saw a year ago.

4. Buy-to-let continued to grow

Buy-to-let lending again performed strongly in the second quarter, and experienced larger growth than we saw in home-owner house purchase activity. This is partly explained by the continuing recovery from a much more pronounced decline in buy-to-let lending, compared to activity by home-owners, during the downturn. The buy-to-let sector accounted for 17% of gross lending in the second quarter of 2015.

5. Lending remained on target to meet our forecasts

Lending was particularly subdued at the beginning of the year, and was running at lower than expected levels. But in the second quarter it began to gain momentum. Our recently revised forecast predicts gross mortgage lending in 2015 will be £209 billion.