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Home-owner house purchase lending up for sixth successive month

Published: 11 October 2013

New CML data released today on the profile of lending in August shows:

  • Total home-owner house purchase lending continued to grow, up 7% on July and 15% on August last year.
  • First-time buyers took out 27,100 loans in August, an increase of 7% on July and of 33% compared to August 2012.
  • Home movers took out 34,200 loans, an increase of 7% compared to July and up 5% on August last year.
  • Home-owner remortgage lending was 7% down in August compared to July but was nearly 11% up on August last year.  
  • Total buy-to-let loans advanced decreased slightly to 14,900 loans in August, compared to 15,200 in July, with a value of £1.9bn.  
  • Within this, 7,900 buy-to-let loans in August were for house purchase, up by 4% compared to July.
  • Buy-to-let remortgage lending fell slightly to 6,900 loans in August from 7,200 loans in July. 

As previously reported, gross UK mortgage lending held steady in August and was an estimated £16.4 billion. This is down 2% on July’s gross lending total of £16.7 billion but is 28% higher than August last year (£13 billion).

Lending for home-owner house purchase

Despite a slight decline in total gross lending in August, lending for home-owner house purchase continued to show growth. In total, 61,300 house purchase loans were advanced in August, up 7% on July and 15% compared to August 2012. This amounted to £9.7bn in total, a 7% increase on July and an increase of 20% by value compared to August last year.

Table 1: Loans for home-owner house purchase and remortgage

  Number of house
purchase loans
Value of house
purchase loans, £m
Number of
remortgage loans
Value of remortgage
loans, £m
August
2013
61,300 9,700 25,100 3,500
Change from
July 2013
6.8% 6.6% -7.0% -7.9%
Change from
August 2013
15.4% 19.8% 10.6% 16.7%

Lending to first-time buyers

Lending to first-time buyers totalled 27,100 loans, an increase of 7% on July and a year-on-year increase of 33%. These loans totalled in value £3.8bn which was an increase of 9% compared to July and a 46% increase by value on August last year.

Accompanying this upward trend in activity, first-time buyers borrowed more relative to income in August compared to July - 3.36 times borrower income in August compared to 3.31 in July. 

However, due to the downward trend in mortgage interest rates, total mortgage payments have remained low relative to income. The typical first-time buyer mortgage payment represented 19.3% of income in August, a figure it has fluctuated around since March. There was a record high of 86% of borrowers taking fixed rate mortgages with 94% of first-time buyers opting for a fixed rate mortgage. 

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
August
2013
27,100 3,800 81% 3.36 11.7% 19.3%
Change from
July 2013
7.1% 8.6% 82% 3.31 11.8% 19.2%
Change from
August 2012
32.8% 46.2% 80% 3.25 13.8% 20.2%

Lending to home movers

Loans advanced to home movers totalled 34,200 in August, which was up 7% compared to July and an increase of 5% on August 2012. Total lending to home movers was worth £6bn in August, an increase of 9% by value on August last year.

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
August
2013
34,200 6,000 70% 2.91 8.7% 18.2%
Change from
July 2013
6.9% 7.1%  70% 2.92 8.8% 18.2%
Change from
August 2012
4.6% 9.1% 69% 2.89 10.3% 19.3%

Lending to home owners for remortgage

Home-owner remortgage fell by 7% in August compared to July with 25,100 loans advanced, but this was significantly up on August 2012. The value of these loans totaled £3.5bn which was a decrease of 9% in value on July but up 17% compared to August last year.

Bank of England approvals figures suggest this same pattern for remortgaging will continue into September completions figures.

Lending for buy-to-let

Lending for buy-to-let decreased slightly in August totaling £1.9bn compared to £2bn in July. Total amount of loans for buy-to-let was 14,900 in August, a slight decrease on 15,200 in July.

Buy-to-let house purchase loans increased to 7,900 in August from 7,600 in July. However, the value of these loans remained the same at £900m. 

Table 4: Loans for buy-to-let house purchase and remortgage

  Number of BTL house
purchase loans
Value of BTL house
purchase loans, £m
Number of BTL 
remortgage loans
Value of BTL remortgage
loans, £m
August
2013
7,900 900 6,900 1,000
Change from
July 2013
3.9% 0.0% -4.2% -9.1%

Lending for buy-to-let remortgage

The small fall in buy-to-let lending was caused mainly due to a fall in buy-to-let remortgage lending from £1.1bn in July to £1bn in August. This came to 6,900 loans in August compared to 7,200 in July.

Paul Smee, director general of the CML, commented: 

“The healthy growth in all lending areas compared to the same time last year is indicative of more confidence in the market. The high number of borrowers, in particular first-time buyers, opting for fixed rates reflects the attractive pricing currently on products which can provide helpful stability to borrowers for the next few years."

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 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey for all home-owner mortgage data. Buy-to-let data is sourced from a sample of CML members and has been grossed to estimate the industry total. The CML began collecting monthly data in January 2013 and will from now on report monthly buy-to-let data in this press releases, alongside our home owner house purchase data.  

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 September 2013 data will be released on Tuesday 12 November 2013.

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