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August house purchase lending down 9% on July but up 2% on last year

Published: 13 October 2015 | Author: Gareth Hill

Lending in August:

  • First-time buyers, home movers, home-owner remortgage and buy-to-let all saw a monthly decline in lending in August but an uptick (significant for buy-to-let) compared to August 2014.  
  • This is a normal seasonal trend, with August typically less strong for mortgage completions. 
  • The underlying picture is of improvement in lending levels on a year-by-year basis.  

Bob Pannell, chief economist of the CML, commented:

Seasonal factors pushed all categories of lending lower in August compared to July. However, the mortgage market continues to see year-on-year growth, and we expect this to continue over the coming months.  

Chart 1: Loans to home-owners and for buy-to-let by value

 August 2015 MLT press release - chart one

Source: CML Regulated Mortgage Survey (April 2005 onwards), CML Economics

Download the data        

Chart 2: Number of loans for house purchase and proportion of FTBs and home-movers

August 2015 MLT lending - Chart 2

Source: CML Regulated Mortgage Survey (April 2005 onwards)

Download the data

Lending for house purchase and remortgage   

Table 1: August lending for home-owner house purchase and remortgage

  No. of house purchase loans % change by volume Value of house purchase loans, £m % change by value No. of remortgage loans  % change by volume Value of remortgage loans, £m % change by value
Aug-15 62,300   11,300   25,600   4,200  
Jul-15 68,700 -9.3% 12,300 -8.1% 30,900 -17.2% 5,100 -17.6%
Aug-15 61,400 +1.5% 10,600 +6.6% 23,000 +11.3% 3,500 +20.0%

Source: CML Regulated Mortgage Survey (April 2005 onwards)

House purchase lending in the UK saw a month-on-month decline by volume and by value for the first time since April this year. However, this was the third consecutive month that lending for house purchase increased year-on-year by volume and by value. This was the highest house purchase lending activity level for the month of August since August 2007. However, volume levels this month were still only 60% of what they were in August 2007.  

As previously reported, UK gross lending in August totalled £19.7bn, down 9% on July but up 10.7% on August last year.  

Overall in August, home-owner loans for house purchase accounted for 57% of gross lending (57% in July), while remortgage activity accounted for 21% (24% in July). Home-owner loans as a share of gross lending have increased since the new year while remortgage activity has edged down. Buy-to-let lending as a proportion of total gross lending remained at 17%, a consistent level since the beginning of the year, but up from 13% in the same period last year.

First-time buyers accounted for 44% of total house purchase lending volumes, a much higher proportion than pre-crisis levels of 30% of the number of loans for house purchase. 

Table 2: August first-time buyer lending and affordability measures

 

No. of loans

% change by volume

Value of loans £m

% change by value

Loan size (£)

Income (£)

Loan-to-value

Loan-to-income

Interest payment as % of income

Capital & interest payment as % of income

Aug-15

27,500

 

4,200

 

128,999

39,508

84.2%

3.45

10.0%

18.5%

Jul-15

30,700

-10.4%

4,700

-10.6%

127,800

39,305

84.4%

3.42

10.1%

18.5%

Aug-14

27,000

+1.9%

4,000

+5.0%

125,250

38,205

83.7%

3.42

12.0%

19.7%

Source: CML Regulated Mortgage Survey (April 2005 onwards)

This was the highest monthly first-time buyer lending level by volume and by value in the month of August since 2007, but the number of loans was only 78% of the August 2007 total. The proportion of first-time buyer gross household monthly income in August to service capital and interest payments stayed the same month-on-month at 18.5%, but remained considerably lower than 19.7% in August last year, and much lower than the most recent high of 24.8% in December 2007. 

Table 3: August home mover lending and affordability measures

 

No. of loans

% change by volume

Value of loans £m

% change by value

Loan size (£)

Income (£)

Loan-to-value

Loan-to-income

Interest payment as % of income

Capital & interest payment as % of income

Aug-15

34,800

  7,100  

168,750

55,891

71.9%

3.14

7.5%

18.1%

Jul-15

38,000

-8.4%

 7,600

-6.6%

166,000

55,215

72.5%

3.12

7.5%

18.0%

Aug-14

34,400

+1.2%

6,600

+7.6%

155,995

54,158

70.3%

3.05

9.0%

18.8%

Source: CML Regulated Mortgage Survey (April 2005 onwards)

This was the highest home mover lending level by volume and by value in the month of August since 2007, although this month's volume levels are still only 51% of the volume levels in August 2007. Home movers spent 18.1% of their monthly gross household income to pay capital and interest repayments, up slightly on last month but down on the same period last year. Like first-time buyers, this is still much lower than the most recent peak of 23.8% in December 2007.

Chart 3: Number of home-owner remortgages

 August 2015 MLT lending - Chart 3

Source: CML Regulated Mortgage Survey (April 2005 onwards)

Download the data

Remortgage activity dropped month-on-month in August 17% by volume and 18% by value compared to July. However, in parallel to house purchase activity, there was a year-on-year increase compared to August 2014 by volume and by value, up 11% and 20% respectively.

Lending for buy-to-let

Buy-to-let lending for house purchase has showed stronger year-on-year growth than home-owner loans for house purchase for most of the year, which in part is a market recovery response as buy-to-let lending declined more than home-owner lending during the downturn. While loans to home-owners for house purchase declined by 50% in volume terms from 2007 to 2009, buy-to-let loans for house purchase declined 71% in the same period. Buy-to-let continues to represent 17% of gross lending in August, a proportion that has remained relatively consistent since the beginning of the year.

Overall, buy-to-let lending decreased in August compared to July, but saw substantial year-on-year increases by volume and value compared to August 2014. 

Table 4: August buy-to-let lending 

 

Gross lending buy-to-let

Buy-to-let house purchase

Buy-to-let remortgage

 

No. of loans

 % change

Value   of loans (£m)

% change

No. of loans

% change

Value   of loans (£m)

% change

No. of loans

% change

Value   of loans (£m)

%
change

08-15

22,200

  3,400

 

10,500

 

1,400

 

11,500

 

1,900

 

07-15

25,200

-11.9%  3,800

-10.5%

11,800

-11.0%

1,600

-12.5%

13,200

-12.9%

2,200

-13.6% 

08-14

16,100

+37.9% 2,300 

+47.8%

8,300

+26.5%

1,000

+40.0%

7,600

+51.3%

1,100

+72.7%

Source: CML Economics

Chart 4: Number of buy-to-let loans for house purchase and remortgage 

 August 2015 MLT Lending - Chart 4

Source: CML Economics

Download the data

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 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. Please see the mortgage statistics timeline on our website for further information.

4. The September 2015 data will be released on Wednesday 11 November 2015.

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