Continued year-on-year home-owner house purchase growth in November

By Bridging Loan Directory -

 

New CML data released today on the profile of UK lending in November 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 fell slightly in November, down in volume by 3% compared to October but still the fourth highest monthly level since December 2007.
  • First-time buyers took out 27,000 loans in November, a modest rise in volume of 0.7% compared to October but up 24% compared to November 2012.
  • The number of loans advanced to home movers declined slightly in November, down 2.4% compared to October.
  • The number of loans advanced to home-owner remortgagors fell in November by 3% compared to October but up 4% on November 2012.
  • The number of buy-to-let loans taken out in November was 16,200, the same volume as October.

The Bank of England reported earlier this month that UK gross mortgage lending was £17 billion in November, a 4% decrease compared to October but 30% higher than the total of £13.1 billion in November last year.

Lending for home-owner house purchase

The total number of loans advanced to home-owner for house purchase decreased in November, down 1% compared to October but up 15% on November 2012. Overall, 60,000 loans were advanced in November with a total in value of £9.4bn, which was a decrease of 2% by value on October but a 22% year-on-year monthly increase. This is the fourth highest monthly lending amount for home-owner house purchase since December 2007.

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

15.01.14 Home owner house purchase graph

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
November
2013
60,000 9,400 27,500 4,100
Change from
October 2013
-1.0% -2.1% -2.8% -2.4%
Change from
November 2012
14.9% 22.0% 4.2% 20.6%

Lending to first-time buyers

There were 27,000 loans to first-time buyers in November, a slight increase of 0.7% compared to October and up 24% compared to October 2012. These loans totalled £3.7bn in value which was exactly the same as October figures but an increase of 37% compared to November 2012.

The typical first-time buyer income multiple declined slightly, with first-time buyers typically borrowing 3.35 times their gross income, compared to 3.36 in October. The typical loan size for first-time buyers was £116,913 in November, again a decrease from £119,500 in October. In parallel to this, the typical income of a first-time buyer household fell slightly to £35,848, which was down 1.7% from £36,465 in October.

The continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.1% of gross income to cover capital and interest payments, lower than the 19.3% in October and on par with the lowest recorded monthly figure since 2005 recorded in April 2012 and April 2013.

Chart 2: First-time buyer lending per month

15.01.14 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
November
2013
27,000 3,700 80% 3.35 11.3% 19.1%
Change from
October 2013
0.7% 0.0% 80% 3.36 11.5% 19.3%
Change from
November 2012
24.4% 37.0% 80% 3.24 13.3% 20.0%

Lending to home movers

The number of loans advanced to home movers for house purchase totalled 33,000 in November, down 2.4% in volume compared to October but up by 8% compared to November 2012. Home mover loans totalled £5.7bn in value in November, which was down from £5.9bn in October but up from £4.9bn in November 2012.

Chart 3: Home mover lending per month

15.01.14 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
November
2013
33,000 5,700 70% 2.97 8.6% 18.5%
Change from
October 2013
-2.4% -3.4% 70% 2.97 8.7% 18.5%
Change from
November 2012
8.2% 16.3% 70% 2.87 9.9% 19.1%

Lending to home owners for remortgage

Home-owner remortgage activity decreased in November with a total of 27,500 remortgage loans advanced in the period, down 3% in volume compared to October but up 4% compared to November 2012. These loans totalled £4.1bn in value, a slight decrease of 2% on October but up 21% compared to November 2012.

Chart 4: Remortgage lending per month

15.01.2014 Remortgage lending graph

Source: CML

Lending for buy-to-let

Buy-to-let lending in November totalled 16,200 loans advanced, which was unchanged on October. The value of these loans totalled £2.1bn, which was also unchanged from October.

Buy-to-let loans for house purchase decreased slightly in November to 8,400 loans advanced, down 1.2% compared to October. The loans totalled £1bn in value, the same as in October.

Buy-to-let remortgage lending increased slightly in November to 7,700 loans, up 1.3% compared to October. These buy-to-let remortgages had a total value of £1.1bn, the same as in October.

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

15.01.14 Buy-to-let graph

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
November
2013
16,200 2,100 8,400 1,000 7,700 1,100
Change from
October 2013
0.0% 0.0% -1.2% 0.0% 1.3% 0.0%

Paul Smee, director general of the CML, commented:

“The Bank of England’s credit survey reported demand in the final quarter of 2013 for house purchases was rising at its fastest pace since the survey began in 2007. This is a significant shift in public mood and, with strong November lending continuing the year-on-year growth seen since April 2013, this should be expected to continue into the New Year.”

Karen Bennett, Sales & Marketing Director, Commercial Mortgages, Shawbrook Bank Limited commented:

“The property market is continuing to show real signs of recovery – boosted by the buy-to-let sector. Looking around the sector, lenders are bringing a range of new products to the market in response to this demand and we are seeing some real innovation. However, we still need to be aware of the need for a responsible and sustainable industry.

The new products aimed at property investors need to take into account interest rate rises when they occur. The forthcoming MMR guidelines show the importance of stress testing throughout the mortgage industry. This includes commercial mortgages, and property investors need to ensure that their property portfolios will generate enough income to cover mortgages once interest rates go up.”