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September sees little movement in mortgage market

Published: 11 November 2010

Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders.

There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.

Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months.

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
 
September 2010 50,000 7,400 29,000 3,600
Change from August 2010 n/c -3% 15% 13%
Change from September 2009 -2% 4% -12% -12%

Loans to first-time buyers increased in number by 4% in September to 18,600 (worth £2.2 billion) but were 6% lower by volume and 4% lower by value than in September 2009. In contrast, the number of home-mover loans fell by 2% to 31,600 in September following a 10% fall in August. And the value also fell by 2%, from £5.3 billion to £5.2 billion.

Credit criteria remain tight and the slight easing of loan-to-value ratios that occurred earlier in the year appears to have reversed. First-time buyers borrowed on average 76% of the value of their property, down from 77% in August, while home movers borrowed 67%, unchanged from August.

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

September 2010 18,600 2,200 76% 3.26 13.4%
Change from August 2010 4% n/c 77% 3.25 13.5%
Change from September 2009 -6% -4% 75% 3.15 15.1%

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

September 2010

31,600

5,200

67%

2.89

9.8%

Change from August 2010

-2%

-2%

67%

2.89

9.6%

Change from September 2009

1%

8%

68%

2.80

11.4%

On a quarterly basis, there were 156,000 loans advanced for house purchase from July to September (worth £23.3 billion), up 13% in volume (17% in value) from April to June and up 1% in volume (9% in value) from July to September 2009. The 83,000 remortgaging loans (worth £10.3 billion) in the third quarter represented a rise of 6% by volume (5% by value) from the second quarter but the number fell by 20% and the value by 19% from the third quarter of 2009.

The number of loans to both first-time buyers and home movers increased in the third quarter by 8% and 16% respectively (values increased by 8% and 21%), but the number of first-time buyers was 5% lower than in the same period of 2009 (with the value of loans advanced staying the same) while the number of home-mover loans increased by 5% (and the value by 12%).

Michael Coogan, director general of the CML, commented:

"With lending volumes at historic lows, stability in the mortgage market is the name of the game at the moment. With both consumer demand falling and funding capacity limited, neither supply nor demand look likely to feed through to any significant improvement in lending volumes as we head into winter."

 

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion. 

2. Source: CML/Banksearch.

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 October RMS data will be released on Friday 10 December 2010.

 

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