Home-owner house purchase lending up 24% year-on-year in October

Shawbrook Bank

 

New CML data released today on the profile of UK lending in October 2013, including first-time buyer, home mover, remortgagor and buy-to-let lending, shows:

  • Total number of loans advanced to home-owners for house purchase rebounded strongly from its seasonal fall in September, up in volume 17% in October and a year-on-year increase of 24%.
  • First-time buyers were advanced 26,800 loans in October, the highest number of loans in a monthly period since November 2007.
  • The number of loans advanced to home movers increased 19% in volume compared to September and was up 16% compared to October last year.
  • The number of loans advanced to home-owner remortgagors fell in October compared to September and fell year-on-year.
  • Total buy-to-let loans advanced increased in October, up to 16,200 loans compared to 14,600 loans in September.

The Bank of England reported earlier this week gross UK mortgage lending was £17.6bn in October, a 9% increase compared to September and 36% higher than the total of £12.9 billion in October last year. This is the highest monthly estimate for gross lending since October 2008 (£18.6 billion).

Lending for home-owner house purchase

Lending for home-owner house purchase increased in October, up 17% compared to September and up 24% on October last year. Overall, 60,800 loans were advanced in October with a total in value of £9.7bn, which was an increase of 17% by value on September this year and a year-on-year monthly increase of 33%. This is the second highest monthly lending amount for home-owner house purchase since November 2007, behind December 2009 when volumes that month were inflated by the impending end of the stamp duty holiday.

Chart 1: Loans for home-owner house purchase per month

12.12.13 home onwer house purchase v2

Source: CML

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

Number of house
purchase loans
Value of house
purchase loans, £m
Number of
remortgage loans
Value of remortgage
loans, £m
October
2013
60,800 9,700 28,300 4,200
Change from
September 2013
17.4% 16.9% -12.4% -10.6%
Change from
October 2012
23.6% 32.9% -2.6% 13.5%

Lending to first-time buyers

There were 26,800 loans to first-time buyers in October, an increase of 16% on September and up 33% compared to October 2012.

These loans totalled £3.7bn in value which was an increase of 16% compared to September and a 48% increase on October last year.

The typical first-time buyer income multiple declined slightly, with first-time buyers typically borrowing 3.36 times their gross income, compared to 3.39 in September. The typical loan size for first-time buyers was £119,500 in October. This was the highest ever recorded level but, in parallel to this, the typical income of first-time buyer households rose to £36,460, which was also the highest ever recorded level.

The continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.3% of gross income to cover capital and interest payments, slightly above the 19.2% in September and close to the lowest recorded monthly figure since 2005 of 19.1% recorded in April 2012 and April 2013.

Chart 2: First-time buyers lending per month

12.12.13 first-time buyer graph

Source: CML

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
October
2013
26,800 3,700 80% 3.36 11.5% 19.3%
Change from
September 2013
15.5% 15.6% 80% 3.39 11.5% 19.2%
Change from
October 2012
33.3% 48.0% 80% 3.25 13.5% 20.0%

Lending to home movers

The number of loans advanced to home movers for house purchase totalled 33,900 in October, up 19% compared to September and up by 16% compared to October last year. Home mover loans totalled £5.9bn in value in October, which was up 16% on September and 23% compared to October last year.

Chart 3: Home movers lending per month

12.12.13 home mover graph

Source: CML

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
October
2013
33,900 5,200 70% 2.97 8.7% 18.5%
Change from
September 2013
18.5% 15.7% 70% 2.97 8.8% 18.3%
Change from
October 2012
16.1% 22.9% 70% 2.90 10.2% 19.4%

Lending to home owners for remortgage

Home-owner remortgage activity declined in October with a total of 28,300 remortgage loans advanced in the period, down 12% compared to September and a 3% fall compared to October last year. These loans totalled £4.2bn in value, a decrease of 11% on September but up 14% compared to October 2012.

Chart 4: Remortgage lending per month

12.12.13 Remortgage lending v2

Source: CML

Lending for buy-to-let

Lending for buy-to-let increased in October with 16,200 buy-to-let loans advanced, which was up 11% in volume compared to September. The value of these loans totalled £2.1bn, which was an increase of 10.5% from September.

Buy-to-let lending for house purchase also grew in October to 8,500 loans advanced, which was an increase of 11.3% compared to September. The loans totalled in value £1bn, an increase of 14.9% compared to September.

Buy-to-let remortgage lending also increased in October, up 11% compared to September. This totalled 7,600 loans advanced for buy-to-let remortgages which had a total value of £1.1bn, an increase in value of 11% compared to September.

Chart 5: Buy-to-let lending for house purchase and remortgage per month

12.12.13 buy-to-let lending

Source: CML

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

 Number of Gross BTL advances in period Value of Gross BTL advances, £m   Number of BTL house purchaseloans Value of BTL house purchase loans, £m Number of BTL
remortgage loans
Value of BTL remortgage
loans, £m
October
2013
16,200 2,100 8,500 1,000 7,600 1,100
Change from
September 2013
11.0% 10.5% 11.3% 14.9% 10.9% 11.1%

Source: CML

Paul Smee, director general of the CML, commented:

“After years of a relatively flat mortgage market, 2013 has shown signs of lending turning a corner and looks set to finish the year strongly. Increased financial optimism among the public as the economy recovers seems to be driving this upward trend and it is welcome to see that first-time buyers continue lending momentum as more look to own their first home.”

 

Shawbrook Bank
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