1. Home
  2. News
  3. Press releases
  4. House purchase lending fall in February

House purchase lending fall in February

Published: 14 April 2015

New CML data on the characteristics of lending in February of 2015 broken down by trends to first-time buyers, home movers, remortgaging and buy-to-let.

Lending in February:

  • Home-owner house purchase lending declined in February both compared to the previous month and February 2014. The number of loans advanced totalled 40,600, down 1% on January and 16% compared to the same month in 2014. These loans totalled £6.8bn, which was down 3% on January and 13% on February last year.
  • There were 18,700 loans advanced to first-time buyers - down 1% on January and 16% compared to February 2014. These loans by value were £2.7 billion, which was down 4% on January and 13% down on February last year.
  • Home movers were advanced 21,900 loans, a decline of 2% compared to January and 16% down year-on-year. These loans totalled in value £4.1bn - 2% down on January and 13% down compared to February 2014.
  • Remortgage lending decreased month-on-month with 21,500 loans advanced - down 16% on January and 14% down on February 2014. The value of these loans (£3.3 billion) also decreased month-on-month by 20% and was down 11% year-on-year compared to February 2014.
  • There were 15,900 buy-to-let loans in February - down 13% on the previous month but up 11% on the same period in 2014. These loans came to £2.2bn in value, down 12% compared to January but up 16% on February 2014.

Paul Smee, director general of the CML, commented: 

"As with January, seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months. Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.

"We this month  launched the CML buy-to-let statement of practice which reflects what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate. We hope it will help in people's understanding of the buy-to-let lending environment and the transparency of the statement of practice can give confidence to landlords that clear and consistent lending policies are being undertaken."

As previously reported, gross mortgage lending reached £13.6 billion in February. This represents an 8% decrease from January’s gross lending total and 8% lower than lending in February 2014.

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

 14.04.2015 house purchase February 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
February 2015 40,600 6,800 21,500 3,300
Change from
January 2015
-1.5% -2.9% -16.0% -19.5%
Change from Feb 2014 -16.3% -12.8% -13.7% -10.8%

Analysis of first-time buyers lending trends

First-time buyer lending was the second highest level in the month of February since 2007, behind only last year's February level. However, there were still 13% fewer loans advanced in 2014 compared to lending levels seen in 2007.

First-time buyer affordability changed fractionally in February, with first-time buyers typically borrowing 3.37 times their gross income, compared to 3.38 in January. The typical loan size for first-time buyers decreased month-on-month to £124,000 in February, down from £124,700 in January. The typical gross income of a first-time buyer household changed slightly to £38,500 in February from £38,456 in Janaury.

First-time buyers in February paid 19.0% of gross income towards covering capital and interest payments, little changed from 19.2% in January 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

 14.04.2015 first time buyer February 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
February 2015 18,700 2,700 81% 3.37 10.8% 19.0%
Compared to January 2015 -1.1% -3.6% 83% 3.38 11.1% 19.2%
Compared to Feb 2014 -16.1% -12.9% 83% 3.43 11.3% 19.2%

Analysis of home mover lending trends

Home movers affordability changed slightly month-on-month, with borrowers typically being advanced a mortgage loan 3.03 times their gross income in February, only a slight change compared to 3.02 in January. The typical loan size for home movers was £155,530 in February, up from £155,000 in January. The typical gross household income of a home mover was £54,000 in February, which was up from £53,612 in January.

Home movers' payment burden remained relatively low in February at 18.3% of gross income being spent to cover monthly capital and interest payments, down from 18.5% in January, and well below the recent peak of 23.8% in December 2007.

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

 14.04.2015 Home movers February 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

February 2015

21,900

4,100

72%

3.03

8.2%

18.3%

Compared to January 2015

-1.8%

-2.4%

72%

3.02

8.5%

18.5%

Compared to February 2014

-16.4%

-12.8%

72%

3.08

8.7%

18.6%

Analysis of remortgage lending

Remortgage lending decreased month-on-month with 21,500 loans advanced - down 16% on January and 14% down on February 2014. The value of these loans (£3.3 billion) also decreased month-on-month by 20% and was down 11% year-on-year compared to February 2014.

Chart 4: Number of loans advanced for remortgage per month

 14.04.2015 Remortgage February 2015

Source: CML

Buy-to-let lending trends in February

Gross buy-to-let advances in February totalled 15,900 loans, down 13% compared to January but up 11% compared to February 2014. These loans represented £2.2bn of lending - down 12% from January but 16% up compared to February 2014.

The number of buy-to-let loans for house purchase was 7,400 in February, down 3% on January but 1% up on February 2014. These loans represented a value of £900m, a decrease of 10% month-on-month but up 3% year-on-year compared to February 2014.

The number of buy-to-let loans remortgages fell 19% in February from January to 8,400, but this was an increase of 23% on February 2014. The value of these loans totalled £1.3bn, down 13% month-on-month but 31% compared with last February.  

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

 14.04.2015 buy to let February 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
February 2015 15,900 2,200 7,400 900 8,400 1,300
Change from
January 2015
-12.6% -12.0% -2.6% -10.0% -19.2% -13.3%
Change from February 2014 11.2% 15.8% 0.8% 3.4% 22.8% 31.3%

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 March 2015 data will be released on Tuesday 19 May 2015.

Contact us

Gareth Hill

020 7438 8922

Sue Anderson

020 7438 8923

Bernard Clarke

020 7438 8924