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  4. House purchase lending down quarter-on-quarter by 5% in fourth quarter of 2014

House purchase lending down quarter-on-quarter by 5% in fourth quarter of 2014

Published: 17 February 2015

The Council of Mortgage Lenders today released new data on the characteristics of UK mortgage lending, broken down for the periods of December, the fourth quarter and annual data for 2014, including trends in first-time buyers, home movers, remortgaging, and buy-to-let. 

Lending in December:

  • House purchase lending to home-buyers increased slightly month-on-month in December totalling 55,600 loans. This was up 1% compared to November with the value of these loans totalling £9.3bn, a rise of 3%. Compared to December 2013, the number of loans decreased by 5% and the value of lending by 1%. 
  • First-time buyers saw a month-on-month lending increase, with 26,100 first-time buyer loans in December - up 3% on November, but 3% down on December 2013. By value, £3.8 billion was advanced to first-time buyers in December - 6% up on November but unchanged compared to December 2013.
  • The number of loans advanced to home movers was 29,500, the same as November but down 8% on December 2013. By value, lending to movers totalled £5.5 billion, up 2% on November but 2% down on December 2013.
  • Remortgage lending activity saw a decline month-on-month in December with the number of remortgage loans totalling 22,300. This was 7% down on November and 13% down on December 2013. The value of these loans (£3.4 billion) was down 6% on the previous month and down 11% on December the previous year.
  • Buy-to-let loans totalled 17,300 in December, unchanged from November but up 18% compared to December 2013. The total value of these loans (£2.5bn) was up 4% month-on-month and up 32% compared to December 2013.

Lending in the fourth quarter:

  • Home-owner house purchase lending totalled 173,200 loans, which was a 5% quarter-on-quarter decline and compared to the fourth quarter of 2013 down 3%. The value of these loans (£28.8 billion) declined compared to the third quarter by 8% but up 2% compared to the same period in 2013.
  • First-time buyers in the fourth quarter saw minimal change compared to the previous quarter and the same quarter in 2013. There were 80,100 loans advanced to first-time buyers in this period - down 2% on the third quarter and unchanged compared to the fourth quarter of 2013. The value of these loans totalled £11.6 billion, which was down 5% on the third quarter but 5% up on the fourth quarter of 2013.
  • Home movers were advanced 93,100 loans in the fourth quarter, a decline of 8% compared to the third quarter and 5% down year-on-year. These loans totalled in value £17.2bn - 10% down on the previous quarter, but unchanged compared to the fourth quarter of 2013.
  • Remortgage lending declined this quarter with 73,100 loans advanced - down 3% on the third quarter and 13% down on the fourth quarter 2013. The value of these loans (£11.1 billion) declined 4% quarter-on-quarter and 10% year-on-year compared to the fourth quarter 2013.
  • Buy-to-let loans totalled 54,000 in the fourth quarter of 2014 - up 4% on the previous quarter and up 16% on the same period in 2013. This totalled in value £7.7bn, an increase of 5% on the third quarter and up 26% on the fourth quarter 2013.

Lending in 2014:

  • Overall for 2014, home-owner house purchase totalled 676,900 loans, up 11% on 2013 and the highest annual lending level since 2007. This meant £112.7 billion was advanced in total in 2014 for house purchase, up 19% on 2013 and again the highest annual value since 2007.
  • First-time buyers in 2014 were advanced a total of 311,500 loans for house purchase, up 15% on 2013. The value of these loans (£45bn) also increased by 24% on the previous year.
  • Home movers were advanced a total of 365,400 loans for house purchase in 2014, up 8% on 2013. The value of these loans (£67.6bn) also increased by 16% on the previous year.
  • Total number of loans for remortgage was 303,100 in 2014 - down 6% compared to 2013. This totalled in value £46 billion, which was up 2% on 2013.
  • Total gross buy-to-let lending for 2014 totalled 197,700 in volume, which was up 23% compared to 2013. This totalled £27.4bn in value, which was a yearly increase of 32%.

Paul Smee, director general of the CML, commented: 

"Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years. The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and we'd expect this steadying of the market to continue in 2015.

"In 2014, the mortgage market saw unprecedented change with the introduction of major regulatory reform but the market has adjusted and kept its stability throughout. There will be challenges in 2015, including preparation work on the European Directive implementation and a General Election potentially bringing new housing policies to be put in place. But the industry is stronger than a year ago and ready to meet the challenges going forward."

As previously reported, gross mortgage lending reached £16.6 billion in December. This was up 3% month-on-month compared to November but down 2% compared to December 2013. This means the gross lending estimate for the fourth quarter of 2014 is £51.1 billion, down 8% on quarter three and down 1% on the fourth quarter of 2013. Overall, for 2014 the gross lending estimate is £204.4 billion, up 14% on 2013.

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

 17.02.2015 quarterly house purchase December 2014

Source: CML

Table 1: Breakdown of total value of mortgage loans per year in the UK

   Home-owner house purchase (in £millions)
Remortgage (in £millions) Buy-to-let gross lending (in £millions) 
  First-time buyers Home movers   BtL house purchase BtL remortgage
2014 45,000 67,600 46,000  12,210 14,320
2013 36,400 58,200 45,200  9,290  10,640

2012

27,500 54,000 41,200  7,380  7,640

2011

23,700 51,700 46,600  6,160  6,330

2010

24,100 54,700 39,500  4,650  3,960

2009

22,000 47,300 51,700  4,530  3,390

2008

23,900 51,800 118,500  12,210  14,610

2007

47,200 107,500 129,000  23,100  20,640

Table 2: 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
December 2014 55,600 9,300 22,300 3,400
Change from
November 2014
1.5% 3.3% -7.1% -5.6%
Change from Dec 2013 -5.1% -1.1% -12.9% -10.5%

Analysis of first-time buyers lending trends

Lending to first-time buyers was at its highest annual levels, in volume and value, since 2007. However, there were still 13% fewer loans advanced in 2014 compared to lending levels seen in 2007. The fourth quarter of 2014, saw the third strongest volume of first-time buyers taking out loans since 2007, behind the two preceding quarters of 2014.

First-time buyer affordability changed fractionally in December, with first-time buyers typically borrowing 3.39 times their gross income, compared to 3.37 in November. The typical loan size for first-time buyers rose month-on-month to £125,400 in December, up from £123,746 in November. The typical gross income of a first-time buyer household changed slightly to £38,646 in December from £38,113 in November. 

First-time buyers in December paid 19.0% of gross income towards covering capital and interest payments, little changed from 19.3% in November but still significantly less than the recent peak of 24.8% in December 2007. 

First-time buyers in the fourth quarter of 2014 saw some improvements in affordability quarter-on-quarter with the average loan-to-value at 3.38, down from 3.41 in the third quarter, and the average percentage of gross income on capital and interest repayments decreasing to 19.2% from 19.6%. However, the average total household income of a first-time buyer declined slightly from £38,463 to £38,324, but this was countered by a decrease in the average mortgage size quarter-on-quarter from £125,900 to £124,450.

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

 17.02.2015 quarterly first time buyers december 2014

Source: CML

Table 3: 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
December 2014 26,100 3,800 81% 3.39 11.0% 19.0%
Change from
Nov 2014
3.2% 5.6% 83% 3.37 11.6% 19.3%
Change from
Dec 2013
-2.6% 0.0% 80% 3.43 11.1% 19.2%

Analysis of home mover lending trends

In both value and volume, this is the highest yearly amount of activity for home movers since 2007, and the fourth quarter has stayed fairly consistent with the highest levels of quarterly activity we have seen in recent years.

Home movers affordability changed slightly month-on-month, with borrowers typically being advanced a mortgage loan 3.04 times their gross income in December, only a sight change compared to 3.02 in November. The typical loan size for home movers was £155,800 in December, up from £152,100 in November. The typical gross household income of a home mover was £53,500 in December, which was up from £52,900 in November.

Home movers' payment burden remained relatively low in December at 18.3% of gross income being spent to cover monthly capital and interest payments, down from 18.4% in November, and well below the recent peak of 23.8% in December 2007. 

Home movers in the fourth quarter of 2014 saw the average loan-to-value ratio improvement to 3.03, down from 3.05 in the third quarter, and the average percentage of gross income paid towards capital and interest repayments decreased to 18.4% from 18.8%. However, the average total household income of a home movers, similarly to first-time buyers, declined slightly from £53,854 to £53,193, but this was countered by a decrease in the average mortgage size quarter-on-quarter from £155,325 to £153,500. 

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

 17.02.2015 quarterly home movers december 2014

Source: CML

Table 4: 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

December 2014

29,700

5,500

72%

3.04

8.5%

18.3%

Change from

Nov 2014

-0.3%

1.9% 

71%

3.02

8.8%

18.4%

Change from

Dec 2013

-7.2%

-1.8%

71%

3.04

8.4%

18.3%

Analysis of remortgage lending

Unlike home-owner house purchase, the annual number of remortgage loans declined year-on-year to their lowest volume since 1997. While there was a decrease year-on-year in volumes, the quarterly levels throughout 2014 did not vary dramatically, keeping fairly consistent in volume and value.

Chart 4: Number of loans advanced for remortgage per quarter

 17.02.2015 quarterly remortgage december 2014

Source: CML

Buy-to-let lending trends in December

Gross buy-to-let advances in December totalled 17,300 loans, which was unchanged compared to November but a year-on-year increase of 18% compared to December 2013. These loans totalled £2.5bn in value - up 4% on November and 32% compared to December 2013.

Within this, buy-to-let loans for house purchase totalled 8,550 in December, which was up 1% on November and a 17% increase on December 2013. These loans totalled £1.1bn, an increase of 6% month-on-month and up 29% year-on-year compared to December 2013.

The number of buy-to-let loans advanced for remortgage declined month-on-month by 1% in December totalling 8,610 loans, but this was an increase of 20% on December 2013. The value of these loans totalled £1.4bn, up 2% month-on-month and an increase of 32% year-on-year.  

Buy-to-let lending trends in the fourth quarter

There were 54,000 buy-to-let loans in the fourth quarter, representing lending of £7.7bn. The volume of loans increased 4% and value of these loans was up 5% compared to the third quarter. Compared to the fourth quarter 2013, there was a 16% increase by volume and 26% by value.

Within the overall total of buy-to-let loans in the fourth quarter, 26,700 were advanced for house purchase and 26,900 for remortgage. The number of buy-to-let house purchase loans increased by 1% compared to the third quarter and up 13% compared to the fourth quarter 2013. This totalled £3.3bn in value, up 1% on the third quarter and 21% on the fourth quarter 2013.

The number of remortgage loans increased in the fourth quarter, up 7% on the third quarter and 19% compared to the fourth quarter 2013. These loans had a total value of £4.1bn, up 10% on the third quarter and up 29% on the fourth quarter 2013.

Buy-to-let lending in 2014

Overall in 2014, gross buy-to-let loans totalled 197,700 and totalled in value at £27.4bn. This was an increase compared to the previous year of 23% by volume and 32% by value. Within this, buy-to-let house purchase lending totalled 100,100 loans and buy-to-let remortgage loans totalled 96,020.

The number of buy-to-let house purchase loans increased 21% compared to 2013 in volume and was up in value by 31% to total £12.2bn. The number of remortgage buy-to-let loans was up in volume by 26% year-on-year and totalled in value £14.3bn, an increase of 35% compared to 2013.

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

 17.02.2015 buy-to-let quarterly December 2014

Source: CML

Table 5: 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
December 2014 17,300 2,500 8,550 1,080 8,610 1,350
Change from
November 2014
0.0% 4.2% 1.1% 5.9% -1.3% 2.3%
Change from December 2013 18.5% 31.6% 17.4% 28.4% 19.6% 32.4%

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 January 2014 data will be released on Tuesday 17 March 2015.

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