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Mortgage market sees highest number of first-time buyers since August 2010

Published: 10 August 2011

June saw the highest number of mortgages taken out by first-time buyers in 10 months, according to data released today by the Council of Mortgage Lenders. There were 18,100 loans to first-time buyers, worth £2.2 billion, 24% higher by volume and 29% higher by value than in May. June’s first-time buyer numbers were exactly the same as in last August, but 8% lower by volume and value than in June 2010.

Home movers took out 28,600 loans, worth £4.6 billion, in June  - up from 23,800, worth £3.7 billion in May, but down from 32,800 loans, worth £5.3 billion, in June 2010.

Overall, there were 46,700 loans for house purchase, worth £6.7 billion, in June, up 22% in volume and value from May, but down 11% by volume and 13% by value on June 2010.

Remortgaging was unchanged in June, totalling 30,700 loans worth £3.8 billion. Unlike lending for house purchase, however, remortgaging was up 10% by volume and 9% by value on June 2010.

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
 
June 2011 46,700 6,700 30,700 3,800
Change from May 2011 22% 22% n/c n/c
Change from June 2010 -11% -13% 10% 9%

Lending for house purchase increased in the second quarter. Between April and June, there were 122,000 loans for house purchase, worth £17.6 billion, up from 97,200, worth £14.1 billion, in the first quarter. But lending for house purchase was lower than in the second quarter last year, when there were 138,300 loans, worth £20 billion.

Between April and June, lenders advanced 87,600 remortgaging loans, worth £10.8 billion, down from 92,700, worth £11.2 billion, in the first quarter, but up from 78,400, worth £9.8 billion, in the second quarter of 2010.

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

June 2011 18,100 2,200 80% 3.22 13.4%
Change from May 2011 24% 29% 80% 3.18 13.4%
Change from June 2010 -8% -8% 76% 3.28 13.3%


There was little change in lending requirements for either first-time buyers and home movers in June. First-time buyers, on average paid a 20% deposit, unchanged since February. First-time buyer deposits are lower than the high of 25% seen throughout 2009, but higher than the historic norm of 10%. Home movers took out a mortgage worth 70% of their property's value for the second month. This figure has barely moved over the last few years.

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

June 2011

28,600

4,600

70%

2.88

9.8%

Change from May 2011

20%

24%

70%

2.85

10.0%

Change from June 2010

-13%

-13%

69%

2.91

9.6%

The popularity of fixed-rate mortgages continued to edge up in the second quarter, with 63% of borrowers opting for a fixed rate, compared to 60% in the first quarter and just 46% in the second quarter of 2010. While no immediate rise in interest rate rises is expected, uncertainty over when the first rise will come may have been incentivising borrowers to fix their rates in the second quarter.

The trend away from interest-only mortgages continues for all borrowers, with 87% of house purchase loans in June taken out on a repayment basis, up from 86% in May. This is likely to persist as future home movers and remortgagers continue to take out future mortgages on a repayment basis.

Commenting on the data, CML director general Paul Smee said:

"Whilst there are clearly financial uncertainties ahead, it is encouraging to see more house buyers surfacing at the start of summer. Recent increases in Bank of England approvals figures also show that more completions are expected in July, so the more encouraging numbers may persist for a while."

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 11.3 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.

4. The July 2011 data will be released on Monday 12 September 2011.

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