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Growth returned to mortgage lending in November

Published: 16 January 2012

House purchase lending in November experienced a year-on-year rise for only the second time in 2011, according to the Council of Mortgage Lenders.
 
Loans for house purchase totalled 47,000 (worth £6.9 billion) in November, a 4% rise (5% in value) from October and a 3% rise (5% in value) compared to November 2010. Remortgaging also increased. There were 31,200 loans (worth £4 billion), up from 29,500 (worth £3.7 billion) in October and 30,700 (worth £3.8 billion) the previous November.

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
 
November 2011 47,000 6,900 31,200 4,000
Change from October 2011 4% 5% 6% 8%
Change from November 2010 3% 5% 2% 5%

First-time buyers took out 17,300 loans, worth £2.1 billion in November, up 4% by volume and 5% by value compared to both October 2011 and November 2010. Home mover loans increased by 5% in volume and 4% in value from October and by 2% in volume and value from a year ago. While the number of first-time buyers (and indeed all buyers) has declined markedly since the credit crunch, the proportion of loans advanced to first-time buyers has remained remarkably steady, fluctuating between 34-40% since 2005. In November, first-time buyers took up 37% of the house purchase market, the same as in October.

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

November 2011 17,300 2,100 80% 3.23 12.2%
Change from October 2011 4% 5% 80% 3.20 12.3%
Change from November 2010 4% 5% 80% 3.22 13.0%


First-time buyers continued to see a decline in the proportion of their income accounted for by mortgage interest payments – 12.2% in November compared to 12.3% in October and 13% the previous November. Mortgage interest payments for home movers, however, stayed static at 9.2% for the second month, still the lowest proportion in nine 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

November 2011

29,800

4,800

70%

2.89

9.2%

Change from October 2011

5%

4%

69%

2.89

9.2%

Change from November 2010

2%

2%

68%

2.87

9.6%


Fixed-rate mortgages increased in popularity to their highest point in more than two years in November. 65% of all borrowers took out a fixed rate, up from 62% in October. This may be because a rise in interest rates seems more likely, although not imminent, and borrowers may want to lock in to current favourable rates.

Repayment mortgages continue to be chosen by the vast majority of borrowers. 98% of first-time buyers (up from 97%), 83% of movers (up from 82%) and 79% of remortgagers (up from 77%) took out a repayment mortgage in November.

CML director general Paul Smee commented:

"A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies both at home and in the Eurozone. We should expect a further increase in first-time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March."

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 11.2 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 December 2011 data will be released on Monday 13 February 2012.

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