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CML: Lending at highest level since 2007

Sam Cordon

November 12, 2013

Lending for home-owner house purchase declined slightly due to the seasonal dip in the yearly lending cycle to 52,800 loans.

However, 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.

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.”

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.

But Jeremy Duncombe, director, Legal & General Mortgage Club, said: “So far, 2013 has seen a revival in fixed rate products. 86% of all house purchases and re-mortgages in August were taken out with a fixed rate mortgage deal. This is compared to 67% for August 2012 and 77% at the peak of the housing boom in August 2007.

“Obviously the popularity of fixed products is in part due to the historically low rates currently available.

“The average rate in August 2013 was 3.31%, compared to 4.25% and 5.86% for the same periods in 2012 and 2007 respectively.

“The opportunity to get on the housing ladder, move home or re-mortgage are there, so it’s wise for people to get advice about their personal circumstances wherever possible to help them make sensible and well informed decisions”

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.

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.


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