Total home-owner house purchase lending fell in September, down 14% on August but up year-on-year by 20%, according to the Council of Mortgage Lenders (CML).

First-time buyers took out 23,600 loans in September, a 34% increase compared to September 2012. Third quarter results saw first-time buyer lending up 16% on the second quarter of 2013 and 34% up on Q3 2012.

Home movers lending decreased by 16% in volume compared to August but was up 18% compared to last year. Third quarter lending for home movers was up 21% on the second quarter.

Home-owner remortgage lending showed strong growth in September, up 20% compared to August and up 11% in the third quarter compared to the second quarter of 2013.

Total buy-to-let loans advanced increased slightly to 14,600 loans in September, up 0.7% compared to August. Buy-to-let overall in quarter three of 2013 grew compared to the second quarter and the same period last year.

Lending for home-owner house purchase declined slightly in September due to the seasonal dip consistently seen in the yearly lending cycle to 52,800 loans, down by 14% on August, but the underlying growth continued with an increase of 21% on September last year. The value of these loans totalled £8.4bn, down £13% on August but up 27% on September last year.

Overall in the third quarter of 2013, there were 170,700 house purchase loans advanced, worth a total of £27.1bn, which is the highest quarterly figure since the fourth quarter of 2007.

Table 1: Loans for home-owner house purchase and remortgage

Lending to first-time buyers totalled 23,600 loans in September, a decrease of 12% in volume compared to August but up 34% compared to September 2012.

These loans totalled £3.3bn in value which was a decrease of 11% compared to August but a 50% increase by value on September last year.

Overall in the third quarter of 2013, 74,800 loans were advanced to first-time buyers, which had a value of £10.4bn. This was an increase of 16% from 64,500 loans in the second quarter of 2013 and an increase of 34% from 56,000 loans in the same period in 2012.

The typical first-time buyer income multiple continued an upward trend with first-time buyers typically borrowing 3.39 times their gross income. Despite this, the continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.2% of gross income to cover capital and interest payments, slightly above the 19.1% lowest figure since 2005.

Table 2: First-time buyers, lending and affordability

Loans advanced to home movers totalled 29,100 in September, which was down in volume 16% compared to August but up by 11% compared to September last year. Home mover loans totalled £5.2bn in value in September, which was down 13% on August but up 18% compared to last year.

Overall for the third quarter of 2013, loans advanced to home movers totalled 95,700, worth £16.8bn. This was an increase of 21% in volume, and 28% in value, compared to the second quarter of 2013. This was also 9% higher in numbers compared to the third quarter last year and 13% up in value.

Table 3: Home movers, lending and affordability

Home-owner remortgage showed strong growth in September with a total of 32,900 remortgage loans advanced in the period, up 20% compared to August and 36% on September last year. This totalled £4.7bn in value, an increase of 24% on August and 47% in value compared to September 2012.

Remortgaging in the third quarter of 2013 grew by 11% to 90,400 loans advanced from the second quarter of 2013 and up from 72,000 loans in quarter three of 2012.

Lending for buy-to-let increased marginally in September with 14,600 buy-to-let loans advanced, which was up 0.7% in volume compared to August. The value of these loans totalled £1.9bn, which was unchanged from August.

Overall buy-to-let lending in the third quarter of 2013 grew with 43,900 loans advanced in this quarter which was up 16% on the second quarter of 2012 and 36% compared to last year. These loans were worth £5.7bn which was up 19% on the previous quarter and 43% up compared to the same period last year.

The growth in buy-to-let in the third quarter of 2013 was driven by both buy-to-let house purchase and buy-to-let remortgage. Buy-to-let house purchase lending increased in the third quarter to 22,790 loans advanced compared to 19,410 in the second quarter of 2013. This was also a 29% increase on the third quarter of 2012.

Buy-to-let remortgage lending also increased in the third quarter, up 15% on the second quarter of 2013 and up 42% on the third quarter of 2012. The value of these loans also increased in September to £2.9bn, up 19% on the second quarter of 2013 and up 53% in value compared to the third quarter of 2012.

Table 4: Loans for buy-to-let house purchase and remortgage

Source: CML

Paul Smee, director general of the CML, said: “The typical seasonal fall in lending in September was expected but we are seeing appreciable year-on-year and quarterly lending rises that suggests the market is continuing its recovery.

“First-time buyers were a key driver in the first half of 2013 but now home movers and remortgages are showing renewed strength which puts the market in a good position to continue momentum into the final few months of 2013 and the new year.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Although there tends to be a seasonal fall in lending in September, on a quarterly basis it was at its highest level since 2007, demonstrating that the recovery continues. First-time buyers continue to be extremely active, but home movers and the remortgaging market also continue to pick up, showing strength in all areas, and a healthy, well-functioning market.

“First-time buyers are finding it easier to get a mortgage, as Funding for Lending pushes down rates across the loan-to-value (LTV) curve. Early data regarding the Help to Buy scheme suggest that first-time buyers are also primarily benefiting with more than 80% of the Halifax’s applicants so far being first-time buyers, for example. We expect the scheme to significantly boost the number of first-time buyers in coming months.

“Affordability is not yet an issue, even though first-time buyers continue to borrow slightly more relative to income than in previous months. Cheaper mortgage rates mean total payments remain low relative to income, which is encouraging as it means those getting on the property ladder for the first time are not over stretching themselves. This is crucial as buyers must make sure the numbers add up and they can afford any mortgage they take out.”

He added: “While all this is encouraging, it needs to be put into context. Transaction levels are still well off their pre-crisis peak although the market is moving in the right direction.”