Gross UK mortgage lending rose 12% in July to £16.7 billion, up from £14.9 billion in June and 29% on last July, according to the Council of Mortgage Lenders (CML).
Survey results published by the CML show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.
Lending for home-owner house purchase
Total home-owner house purchase loans (both movers and first-time buyers) continued to show the resilience and growth seen throughout 2013. 57,400 house purchase loans were advanced in July, an increase of 9% on June and up by 21% on July last year. These loans had a total value of £9.1bn, which was an increase of 12% on June and 23% compared to July last year.
Table 1: Loans for house purchase and remortgage
|
|
Number of house |
Value of house |
Number of |
Value of remortgage |
|
July |
57,400 |
9,100 |
27,000 |
3,800 |
|
Change from |
8.9% |
12.3% |
5.5% |
8.6% |
|
Change from |
21.1% |
23.0% |
7.6% |
15.2% |
Lending to first-time buyers
The strong growth in lending to first-time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first-time buyers, worth £3.5bn. By value, first-time buyer lending was 6% up on June and 46% up on July last year.
The typical first-time buyer loan size stayed almost unchanged from June at £117,038, while average first-time buyer household income increased to £36,142 from £35,873 in June.
Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first-time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments (capital and interest) accounted for 19.2% of income, down from 19.3% in June.
Table 2: First-time buyers, lending and affordability
|
|
Number of loans |
Value of loans £m |
Average loan to value |
Average income multiple |
Proportion of income spent on interest payments |
Proportion of income spent on capital and interest payments |
|
July |
25,300 |
3,500 |
82% |
3.31 |
11.8% |
19.2% |
|
Change from |
5.4% |
6.1% |
80% |
3.33 |
12.1% |
19.3% |
|
Change from |
40.6% |
45.8% |
81% |
3.24 |
13.7% |
20.0% |
Lending to home movers
Lending to home movers showed strong growth in July, with 32,000 loans advanced – up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6bn, an increase of 17% compared to June and 12% compared to July last year.
The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.
Table 3: Home movers, lending and affordability
|
|
Number of loans |
Value of loans £m |
Average loan to value |
Average income multiple |
Proportion of income spent on interest payments |
Proportion of income spent on capital and interest payments |
|
July |
32,000 |
5,600 |
70% |
2.92 |
8.8% |
18.3% |
|
Change from |
11.9% |
16.7% |
70% |
2.91 |
9.0% |
18.2% |
|
Change from |
9.2% |
12.0% |
69% |
2.89 |
10.2% |
19.3% |
Lending to home owners for remortgage
Lending to home-owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8bn was advanced in July to home-owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.
Remortgage activity reported by CML is likely to increase in the coming months – Bank of England approvals data showed a 40% increase in July.
Lending for buy-to-let
Lending for buy-to-let has continued to follow an upward trend, similar to the market overall. 15,200 buy-to-let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.
Lending for buy-to-let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.
Table 4: Loans for buy-to-let house purchase and remortgage
|
|
Number of BTL house |
Value of BTL house |
Number of BTL |
Value of BTL remortgage |
|
July |
7,600 |
900 |
7,200 |
1,100 |
|
Change from |
6.7% |
12.5% |
13.4% |
23.6% |
Lending for buy-to-let remortgage
There was strong growth in buy-to-let remortgage lending which increased by 24% in July compared to June, a value of £1.1bn. This equated to 7,200 loans in July for buy-to-let remortgage in total, an increase by 13.4% on June 2013.
Paul Smee, director general of the CML, said: “The notable feature is the catch-up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing.”
