From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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8% fall in loans to home-buyers in October

Published: 14 December 2016

On an unadjusted basis, in October:

  • Home-owners borrowed £10.5bn for house purchase, down 8% month-on-month and 11% year-on-year. They took out 57,800 loans, down 8% on September and 13% on October 2015.
  • First-time buyers borrowed £4.5bn, down 8% on September and 2% on October last year. This equated to 28,900 loans, down 8% month-on-month and 4% year-on-year. 
  • Home movers borrowed £5.9bn, down 9% on a month ago and 18% compared to a year ago. This represented 28,900 loans, down 8% month-on-month and 20% on October 2015.
  • Remortgage activity totalled £6.1bn, up 11% on September and 7% compared to a year ago. This came to 34,700 loans, up 10% month-on-month and 5% compared to a year ago.
  • Landlords borrowed £3bn, up 7% month-on-month but down 21% year-on-year. This came to 18,600 loans in total, up 2% compared to September but down 25% compared to October 2015.

The CML now publishes seasonally adjusted monthly data (also available to download at the bottom of the page), alongside the normal unadjusted data. This makes it easier to spot underlying trends.

Paul Smee, director general of the CML, commented:

Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.

Home-owner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009. This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut.

Home-owner house purchase lending

The amount borrowers are paying as a percentage of their household income to service capital and interest rates reached an another historic low this month for both first-time buyers and home movers at 17.6%.

Affordability metrics for first-time buyers saw the typical loan size remain unchanged from September at £133,200 in October. The average household income decreased slightly from £40,200 in September to £40,000 in October. This meant the income multiple went from 3.53 to 3.56.

The average amount borrowed by home movers in the UK increased to £171,700 in October from £171,000 in September, while the average home mover household income decreased slightly to £54,900 from £55,100. The income multiple for the average home mover remained the same month-to-month at 3.26.

On a seasonally adjusted basis, most lending trends were relatively similar. However, first-time buyer loans by value increased by 10% year-on-year, compared to a decrease of 2% on a non-seasonally adjusted basis.

Remortgage loans saw an increase month-on-month and year-on-year by volume and by value. This is the highest amount of loans taken out for remortgage since January 2009.

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

20161214 October 2016 MLT chart one

Source: CML Regulated Mortgage Survey 

Buy-to-let lending in October

Gross buy-to-let lending increased in October compared to September but lending remained down on 2015 levels due to the changes to stamp duty on second properties introduced in April. Nearly two thirds of buy-to-let loans were remortgages rather than house purchase.

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

20161214 October 2016 MLT chart two

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

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

 

House purchase

Remortgage

 

FTBs

Movers

Buy-to-let

Home owners

Buy-to-let

October 2015

30,100

36,000 11,300 33,100

13,200

September 2016

31,500 31,400 6,400 31,600

11,500

October 2016

28,900

28,900 6,200 34,700

12,200

1 month change

 -8.3%  -8.0% -3.1% +9.8%

 +6.1%

12 month change

 -4.0%

-19.7%

 -45.1%

 +4.8%

-7.6%

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

 

House purchase (£m)

Remortgage (£m)

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

October 2015

4,600 7,200 1,600 5,700 2,200

September 2016

4,900 6,500 900 5,500 1,900

October 2016

4,500 5,900 900 6,100 2,000

1 month change

 -8.2%  -9.2% 0.0%  +10.9% +5.3%

12 month change

 -2.2% -18.1%  -43.8% +7.0%

 -9.1%

20161214 October 2016 Affordability first-time buyers infographic

20161214 October 2016 Affordability home movers infographic

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 November 2016 data will be released on Tuesday 17 January 2017.

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