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Subdued pace of house purchase lending continues

Published: 17 March 2015

The Council of Mortgage Lenders today released new data on the characteristics of UK mortgage lending in January 2015, broken down to show first-time buyer, home mover, remortgage and buy-to-let lending. The survey on which the results are based mirrors the FCA's statutory reporting, which is currently in a transition phase following the implementation of the Mortgage Market Review. This month's data (marked in red) may be subject to greater revisions than usual reflecting the transition arrangements. For more information on the new data requirements by the FCA, please refer to the annex of this document.

Lending in January:

  • First-time buyers saw a drop in lending compared to December and the same month in 2014. There were 19,000 loans advanced to first-time buyers January - down 27% on December and 14% compared to January 2014. These loans by value were £2.8 billion, which was down 26% on December and 10% down on January last year.
  • Home movers were advanced 22,400 loans, a decline of 24% compared to December and 17% down year-on-year. These loans totalled in value £4.2bn - 24% down on December and 14% down compared to January 2014.
  • Remortgage lending increased month-on-month with 25,600 loans advanced - up 15% on December but 12% down on January 2014. The value of these loans (£4.1 billion) also increased month-on-month by 21% but was down 5% year-on-year compared to January 2014.
  • There were 18,200 buy-to-let loans in January - up 6% on the previous month and up 12% on the same period in 2014. These loans came to £2.5bn in value, unchanged compared to December but up 14% on January 2014.

Paul Smee, director general of the CML, commented: 

"The traditional beginning of year seasonal lull in lending is slightly more prominent in house purchase lending than in previous years, especially in comparison to the particularly strong levels at the start of 2014. Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months. 

"Increases month-on-month in remortgaging, both for home owners and in the buy-to-let market, are welcome given the recent static nature of remortgage activity. Interest rates are looking unlikely to go up in the very near future and the greater availability of good mortgage rates has probably motivated people to look at a change."

As previously reported, gross mortgage lending reached £14.8 billion in January. This represents an 11% decrease from December’s gross lending total and is 8% lower than lending in January 2014.

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

 17.03.2015 house purchase Jan 2015

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
January 2015 41,400 7,000 25,600 4,100
Change from
December 2014
-25.5% -24.7% 15.3% 20.6%
Change from Jan 2014 -15.5% -12.5% -11.7% -4.7%

Analysis of first-time buyers lending trends

Lending to first-time buyers in January was at its lowest monthly level in 21 months, by both volume and value. However, it was the second highest January lending level since 2007, behind only last January's levels in both volume and value.

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

 17.03.2015 first time buyer Jan 2015

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
January 2015 19,000 2,800 83%

3.38

10.7% 19.0%
Change from Dec 2014 -26.9% -26.3% 81%

3.39

11.0% 19.0%
Change from Jan 2014 -14.0% -9.7% 83%

3.42

11.3% 19.3%

[Affordability metrics for January 2015 marked in red are subject to a larger margin of error than usual, and are subject to future revisions]

Analysis of home mover lending trends

Home mover lending saw the second highest lending level for the month of January since 2008, behind only last year's volume and value. However, this is the lowest monthly lending level of home mover loan volumes in the UK since March 2013 and in value the lowest level since April 2013.

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

 17.03.2015 home mover Jan 2015

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

January 2015

22,400

4,200

72%

3.05

8.2%

18.3%

Change from

Dec 2014

-24.1%

-23.6% 

72%

3.04

8.6%

18.3%

Change from

Jan 2014

-17.0%

-14.3%

71%

3.03

8.6%

18.6%

[Affordability metrics for January 2015 marked in red are subject to a larger margin of error than usual, and are subject to future revisions]

Analysis of remortgage lending

Unlike home-owner house purchase, remortgage lending increased in January compared to December. However, the number of home-owner remortgage loans remained modest, and was lower than last January. The value of these loans totalled £4.1bn, the second highest value for the month of January since 2009, behind only last year's January remortgage value.

Chart 4: Number of loans advanced for remortgage per month

 17.03.2015 remortgage Jan 2015

Source: CML

Buy-to-let lending trends in December

Gross buy-to-let advances in January were boosted by a significant increase in remortgaging, despite a slowdown in house purchase. There were 18,200 loans, up 5% compared to December and 12% compared to January 2014. These loans represented £2.5bn of lending - unchanged from December but 14% up compared to January 2014.

However, the number of buy-to-let loans for house purchase was 7,600 in January, down 10% on December and 6% on January 2014. These loans represented a value of £1bn, a decrease of 7% month-on-month but up 5% year-on-year compared to January 2014.

The number of buy-to-let loans remortgages rose 21% in January from December to 10,400, an increase of 28% on January 2014. The value of these loans totalled £1.5bn, up 11% month-on-month and 29% compared with last January.  

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

 17.03.2015 buy to let Jan 2015

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
January 2015 18,200 2,500 7,600 1,000 10,400 1,500
Change from
December 2014
5.2% 0.0% -11.1% -7.4% 20.8% 11.1%
Change from January 2014 11.7% 13.6% -5.6% 5.3% 27.9% 29.3%

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.

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 February 2014 data will be released on Tuesday 14 April 2015.

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