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First-time buyers borrow 22% more in October than last year

Published: 11 December 2014

New CML data on the characteristics of lending in October of 2014 show growth in lending trends to first-time buyers, home movers and buy-to-let but a decline in remortgaging. 

Monthly highlights:

  • First-time buyers saw a month-on-month lending increase, with 29,900 first-time buyer loans in October - 12% more than in September, and 14% up on October 2013. By value, there was £4.4 billion advanced to first-time buyers in October - 10% up on September and 22% higher than October last year.
  • Lending to home movers also strengthened month-on-month. In October, the number of loans advanced to movers was 35,000, a 10% rise on the previous month and up 4% on October last year. By value, lending to movers totalled £6.5 billion, 8% up on September and up 10% on October last year.
  • Remortgage lending activity saw a decline month-on-month in October, with the number of remortgage loans totalling 26,600. This was 6% down on September and 11% down on October last year. The value of these loans (£4.1 billion) was down 7% on the previous month and down 5% on October last year.
  • There were 19,600 buy-to-let loans in October, representing lending of £2.7bn. This continued the growth seen last month with loan volumes and the value of these loans up 8% on September. Compared to October 2013, the number of loans increased 22% and the value of these loans went up 29%.    

As previously reported, gross mortgage lending reached £18.6 billion in October. This is 3% higher than September (£18.1 billion), and 6% higher than October last year (£17.5 billion). This is the highest lending total for an October since 2007 (£33.1 billion).

Lending for home-owner house purchase

House purchase lending to home-buyers increased month-on-month in October totalling 65,000 loans. This was up 11% compared to September with the value of these loans totalling £10.9bn, a rise of 9%. Compared to October 2013, the number of loans increased by 9% and the value of lending by 15%.    

Chart 1: Number of loans for home-owner house purchase per month

 11.12.2014 October 2014 house purchase chart

Source: CML

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
October 2014 65,000 10,900 26,600 4,100
Change from
September 2014
11.1% 9.0% -6.0% -6.8%
Change from Oct 2013 8.7% 14.7% -10.7% -4.7%

Lending to first-time buyers

First-time buyer affordability changed fractionally, with first-time buyers typically borrowing 3.39 times their gross income, compared to 3.40 in September. The typical loan size for first-time buyers fell slightly month-on-month to £125,800 in October, down from £126,000 in September. The typical gross income of a first-time buyer household changed slightly to £38,820 in October from £38,714 in September. 

First-time buyers in October paid 19.5% of gross income towards covering capital and interest payments, little changed from 19.6% in September but still significantly less than the recent peak of 24.8% in December 2007. 

Chart 2: Number of loans advanced to first-time buyers per month

 11.12.2014 October 2014 FTBs chart

Source: CML

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
Oct 2014 29,900 4,400 84% 3.39 11.9% 19.5%
Change from
Sept 2014
11.6% 10.0% 83% 3.40 12.0% 19.7%
Change from
Oct 2013
13.7% 22.2% 81% 3.39 11.5% 19.3%

Lending to home movers 

Home movers typically borrowed three times their gross income in October, compared to 3.06 in September. The typical loan size for home movers was £153,000 in October, down from £154,965 in September. The typical gross household income of a home mover was £53,500 in October compared to £53,292 in September.

Home movers' payment burden remained relatively low in October at 18.5% of gross income being spent to cover monthly capital and interest payments, down from 18.8% in September, and well below the recent peak of 23.8% in December 2007.  

Chart 3: Number of loans advanced to home movers per month

 11.12.2014 October 2014 home movers chart

Source: CML

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
October 2014 35,000 6,500 71% 3.00 9.0% 18.5%
Change from
Sept 2014
10.4% 8.3%  70% 3.06 9.1% 18.8%
Change from
Oct 2013
4.5% 10.2% 70% 3.00 8.7% 18.4%

Lending to home owners for remortgage

Remortgage lending activity saw a dip month-on-month in October, with the number of remortgage loans totalling 26,600. This was 6% down on September and 11% down on October last year. The value of these loans (£4.1 billion) was down 7% on the previous month and down 5% on October last year.

Chart 4: Number of loans advanced for remortgage per month

 11.12.2014 October 2014 remortgage chart

Source: CML

Buy-to-let lending

There were 19,600 buy-to-let loans in October, representing lending of £2.7bn. The number and value of these loans were up compared to September both by 8%. Compared to October 2013, this was a 22% increase by volume and 29% by value. 

Within the overall total of buy-to-let loans in October, 9,900 were advanced for house purchase and 9,500 for remortgage. The number of buy-to-let house purchase loans increased by 13% compared to September and up 20% compared to October last year. This totalled £1.2bn in value, up 10% on September and up 28% on October last year. 

The number of remortgage loans increased in October, up 3% on September and up 23% compared to October last year. These loans had a total value of £1.4bn, up 2% on September and up 26% on October last year.

Chart 5: Number of buy-to-let loans advanced for house purchase and remortgage per month

 11.12.2014 October 2014 buy to let chart

Source: CML

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

   Number of Gross BTL advances in period Value of Gross BTL advances, £m   Number of BTL house purchase loans Value of BTL house purchase loans, £m Number of BTL  
remortgage loans
Value of BTL remortgage
loans, £m
October 2014 19,600 2,700 9,900 1,200 9,500 1,400
Change from
September 2014
8.3% 8.0% 13.0% 10.1% 2.6% 2.2%
Change from October 2013 21.7% 28.6% 19.9% 27.7% 22.7% 26.1%

Paul Smee, director general of the CML, commented: 

โ€œThis has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy-to-let lending showing steady, consistent growth throughout 2014 compared to 2013. There have been fluctuations month to month but overall the market appears to be showing a positive direction of travel going into the new year.  

"Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts; the new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes."

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 11.1 million mortgages in the UK, with loans worth over £1.3 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 release, 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. Please see the mortgage statistics timeline on our website for further information.

4. The November 2014 data will be released on Wednesday 14 January 2014.

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