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First-time buyer activity helped drive lending in June

Published: 13 August 2012

First-time buyer activity helped sustain lending for house purchase in June, according to data published today by the Council of Mortgage Lenders. The figures show that lending to first-time buyers during the month was at its highest since July 2010 - with the exception of March this year, when first-time buyer activity was boosted by the stamp duty concession.

First-time buyer purchases helped deliver an increase in lending for house-buying, but a contraction in remortgaging led to a decline in lending overall. Gross lending totalled £11.7 billion in June, 6% lower than May's total of £12.5 billion and 7% lower than in last June.

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 2012 47,500 7,100 23,400 3,100
Change from May 2012 1.7% 1.4% -20.9% -18.4%
Change from June 2011 -0.8% 1.4% -24.5% -18.4%

 

House purchase lending showed a modest increase in June, with 47,500 loans, worth £7.1 billion advanced (an increase on the preceding month of 2% by volume and 1% by value). Year-on-year, lending for house purchase was flat (down 1% by volume but up 1% by value). But there was a marked decline in remortgaging, perhaps driven by expectations that borrowing rates could fall later in the summer. Borrowers took out 23,400 remortgaging loans, worth £3.1 billion (21% lower by volume and 18% lower by value than in May, and down year-on-year 25% by volume and 18% by value).

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  Proportion of income spent on capital and interest payments 
June 2012  19,200 2,400  80% 3.29  13.5  19.9 
Change from May 2012  9.1%  9.1% 80%  3.24  13.2  19.6
Change from June 2011  3.8% 9.1%   80%  3.21  13.3  19.8

 

First-time buyer activity, which had been affected in the spring by the stamp duty concession ending in March, held up in June. The return to a more normal pattern of activity continued, with half of buyers in this group purchasing properties priced between £125,000 and £250,000, broadly in line with what we have seen since 2007 (the proportion had risen to 63% in March, driven by the stamp duty incentive) .

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 Proportion of income spent on capital and interest payments
June 2012 28,200 4,700 70% 2.91 10.3 19.4
Change from May 2012 -3.4% -2.1% 70% 2.89 10.2 19.3
Change from June 2011 -3.8% no change 70% 2.87 9.9 19.0

 

Loans taken out by movers in June totalled 28,200, worth £4.7 billion - around 3% lower by number than in May and in June last year. In the second quarter, however, movers took out 79,900 loans, 13% more than in the first three months of the year (71,000). Activity by movers was the main driver of a 6% increase in the number of loans for house purchase in the second quarter, with first-time buyer numbers in the first half of the year fluctuating as a result of the stamp duty changes.

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

"Lending figures have see-sawed in the first half of the year, and we may see more fluctuations in the coming months as the effects of the Olympics and other special events in the UK this year are reflected in our lending numbers. Within that broader context, first-time buyer activity is showing some signs of resilience as we move away from the obvious effects of the stamp duty concession, a trend that it would be good to see maintained."

 

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% 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. Please see the mortgage statistics timeline on our website for further information.

4. The July 2012 data will be released on Wednesday 12 September 2012.

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