Remortgages on the rise in January, CML data shows

On an unadjusted basis, lending in January:

• Home-owners borrowed £8.4bn for house purchase, down 25% month-on-month but up 12% year-on-year. They took out 46,200 loans, down 27% on December but up 5% on January 2015.
• First-time buyers borrowed £3.3bn in January, down 27% on December but up 14% on January last year. This totalled 21,400 loans, down 28% month-on-month but up 6% year-on-year. 
• Home movers borrowed £5.1bn, down 24% on December but up 11% compared to a year ago. This totalled 24,800 loans, down 26% month-on-month but up 3% on January 2015.
• Home-owner remortgagors borrowed £5.8bn, up 35% on December and 32% compared to a year ago. This totalled 33,100 loans, up 28% month-on-month and 19% compared to a year ago.
• Landlords borrowed £3.7bn in January, up 9% month-on-month and 42% year-on-year. This came to 23,100 loans in total, of which 13,400 were for remortgage, up 3% compared to December and up 31% compared to January 2015.

The CML this month also introduces publication of seasonally adjusted monthly data (click here to download table), alongside the unadjusted data. This makes it easier to spot underlying trends.

Paul Smee, director general of the CML, commented:

We are now pleased to be able to analyse monthly lending on a seasonally adjusted basis. While the unadjusted data appears to show large falls in January compared to December, stripping out the usual January lull we see a general picture of flat house purchase lending but a significant uptick in remortgage activity, as borrowers continue to seek attractive new deals despite the lower-for-longer expectations for interest rates.

Home owner lending

In line with the expected seasonal dip in activity, the number of first-time buyers was at its lowest monthly level since February 2015. Looking through seasonal factors, lending was flat in January, compared to December 2015. However, affordability was slightly improved this month with average loan sizes and loan-to-income multiples decreasing compared to December. The proportion of income first-time buyers are committing to capital and interest repayments remained at its lowest level since records began in 2005.

Home mover activity was also affected by the seasonal lull, with January experiencing the lowest number of home mover loans advanced for house purchase since February 2015. However, average loan size decreased and average household income increased month-on-month, meaning income multiples decreased for home movers and the percentage of monthly household income spent to service capital and interest repayments also decreased.

In contrast to house purchase lending, remortgage lending to home-owners saw substantial increases month-on-month (and year-on-year), resulting in the highest lending borrowed in a single month for remortgage in the UK since January 2009.

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

          

Source: CML Regulated Mortgage Survey       

Buy-to-let lending

The number of loans for buy-to-let house purchase dipped in January compared to December. However, the value of total buy-to-let lending increased due to continually strong buy-to-let remortgage activity. The number of buy-to-let remortgages in January was at the highest monthly level since we began tracking monthly buy-to-let lending in January 2013.

Chart 2: Number of loans for buy-to-let, 2007-2016

 

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

Table 1: Number of loans for house purchase and remortgage

	House purchase			Remortgage
	FTBs	Movers	Buy-to-let	Home owners	Buy-to-let
January 2015	20,100	24,000	7,800	27,800	9,700
December 2015	29,500	33,700	10,300	25,800	11,900
January 2016	21,400	24,800	9,500	33,100	13,400
1 month change	-27.5%	-26.4%	-7.8%	+28.3%	+12.6%
12 month change	+6.5%	+10.9%	+21.8%	+19.1%	+38.1%

Table 2: Value of loans for house purchase and remortgage

	House purchase (£m)			Remortgage (£m)
	FTBs	Movers	Buy-to-let	Home owners	Buy-to-let
January 2015	2,900	4,600	1,000	4,400	1,500
December 2015	4,500	6,700	1,400	4,300	1,900
January 2016	3,300	5,100	1,400	5,800	2,200
1 month change	-26.7%	-23.9%	Unchanged	+34.9%	+15.8%
12 month change	+13.8%	+10.9%	+40.0%	+31.8%	+46.7%

January first-time buyer affordability measures

	Loan size (£)	Income (£)	Loan-to-value	Loan-to-income	Interest payment as % of income	Capital & interest payment as % of income
January 2015	122,720	38,000	83.5%	3.35	11.2%	19.1%
December 2015	130,999	39,485	80.4%	3.49	9.6%	18.2%
January 2016	128,960	39,558	84.3%	3.45	9.5%	18.2%

Source: CML Regulated Mortgage Survey (April 2005 onwards)

January home mover affordability measures

	Loan size (£)	Income (£)	Loan-to-value	Loan-to-income	Interest payment as % of income	Capital & interest payment as % of income
January 2015	156,750	53,405	72.7%	3.02	8.6%	18.6%
December 2015	166,875	54,231	73.2%	3.21	7.7%	18.1%
January 2016	166,794	54,382	72.7%	3.17	7.6%	18.1%

Source: CML Regulated Mortgage Survey (April 2005 onwards)