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Home buying activity declines in January

Published: 14 March 2017

On a non-seasonally adjusted basis, lending in January:

  • Home buyers borrowed £8.4bn in January, down 28% on December and unchanged on January 2016. This came to 45,700 loans, down 28% on December and 1% on January 2016.
  • First-time buyers borrowed £3.6bn for home-owner house purchase, down 29% on December but up 9% on January 2016. They took out 22,600 loans, down 29% month-on-month but up 7% year-on-year. 
  • Home movers borrowed £4.9bn, down 25% on December and 4% year-on-year. This equated to 23,000 loans, down 27% month-on-month and 7% compared to January 2016.  
  • Home-owner remortgage activity was up 54% by value and 46% by volume on December. Compared to January 2016, remortgage lending was up 22% by value and 21% by volume. 
  • Gross buy-to-let saw month-on-month increases, up 11% by value and 12% by volume. Compared to January 2016,  both the number of loans and the amount borrowed decreased by 16%.    

Looking on a seasonally adjusted basis, the month-on-month change in first-time buyer and home mover activity was minimal. First-time buyer lending decreased 2% by value with the number of loans up 2% compared to December. There was growth by volume and by value year-on-year. The number of home mover loans increased 3% month-on-month and the total amount borrowed remained unchanged, while year-on-year activity decreased slightly by value and by volume. Full seasonally and non-seasonally adjusted data can be downloaded at the bottom of the page.

Paul Smee, director general of the CML, commented:

January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector. We expect a seasonal dip in activity in the winter months and this appears to be the case in January. However, the lull in moving activity appears stubbornly persistent, and we have commissioned research on the reasons why the number of transactions seems in secular decline.

Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.

Home-owner house purchase lending in January

The number of loans advanced for house purchase in January was at its lowest monthly level since February 2015; a near two year low.

The proportion of household income used to service capital and interest rates continued to be near historic lows this month for both first-time buyers and home movers both at 17.5%.

Affordability metrics for first-time buyers saw the typical loan size decrease from £136,000 in December to £132,400 in January. The average household income also decreased to £40,200 from £40,400. This meant the income multiple went from 3.57 to 3.53.

The average amount borrowed by home movers in the UK increased to £175,500 from £175,000 in December, while the average home mover household income remained unchanged month-on-month at £55,000. The income multiple for the average home mover went from 3.32 to 3.34.

Chart 1: Number of loans to home-owners, 2007-2016

20170313 January 2017 MLT release chart 1

Source: CML Regulated Mortgage Survey 

Buy-to-let lending in January

The number of loans advanced for buy-to-let was the second highest monthly level since the changes to stamp duty on second properties in April 2016, behind November 2016. This activity was driven by buy-to-let remortgage lending which accounted for over two thirds of total lending. The number of loans for buy-to-let house purchase advanced in January was at an eight month low in part due to the traditional seasonal dip in activity in the winter months. By contrast, buy-to-let remortgage lending was at its highest monthly level, alongside November last year, since the stamp duty reform was introduced. 

Chart 2: Number of loans for buy-to-let

20170313 January 2017 MLT release chart 2

Source: CML Economics (pre-2013 data based on quarterly data)

Table 1: Number of loans for house purchase and remortgage in January

 

House purchase

Remortgage

 

FTBs

Movers

Buy-to-let

Home owners

Buy-to-let

January 2016

21,200

24,700 9,700 33,200

13,700

December 2016

31,900 31,500  6,400 27,700 11,200

January 2017

22,600 23,000  5,900 40,300

13,900

1 month change

 -29.2%  -27.0%  -7.8%  +45.5%  +24.1%

12 month change

 +6.6%  -6.9%  -39.2%  +21.4%  +1.5%

Table 2: Value of loans for house purchase and remortgage in January

 

House purchase (£m)

Remortgage (£m)

  FTBs Movers Buy-to-let Home owners Buy-to-let

January 2016

3,300 5,100 1,400 5,800 2,300

December 2016

5,100 6,500 900 4,600 1,800

January 2017

3,600 4,900 800 7,100 2,200

1 month change

 -29.4%  -24.6%  -11.1%  +54.3%  +22.2%

12 month change

 +9.1%  -3.9%  -42.9%  +22.4%  -4.3%

20170313 January 2017 MLT infographic FTBS

20170313 January 2017 MLT infographic home movers 

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 97% 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.

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 2017 data will be released on Tuesday 11 April 2017.

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