House purchase lending down 12pc

Ryan Fowler

January 14, 2015

First-time buyers numbers saw a month-on-month lending decline, with 25,900 first-time buyer loans being advanced in November – down 11% on October, and 3% down on November 2013.

Lending to home movers also declined month-on-month to 29,700 which represents a 13% reduction. The remortgage sector also continued on its downward curve with an 8% month-on-month decline.

However it wasn’t all bad news for the market as the buy-to-let sector recorded a year-on-year increase of 9%.

There were 17,700 buy-to-let loans in November, representing lending of £2.4bn. This was a decrease on the previous month with loan volumes down 10% and the value of these loans down 11%. Compared to November 2013, the number of loans increased 9% and the value of these loans went up 14%.

The CML also found that first-time buyer affordability had changed fractionally, with first-time buyers typically borrowing 3.37 times their gross income, compared to 3.39 in October.

The typical loan size for first-time buyers fell for the second consecutive time month-on-month to £124,822 in November, down from £125,800 in October.

The typical gross income of a first-time buyer household changed slightly to £38,476 in November from £38,801 in October.

First-time buyers in November paid 19.3% of gross income towards covering capital and interest payments, little changed from 19.5% in October but still significantly less than the recent peak of 24.8% in December 2007.

But Paul Smee, director general of the CML, said it isn’t all bad news for the sector and that he expects to see growth moving forward.

He said: “The easing back of activity is not completely unexpected as there is usually a seasonal lending dip in the winter months and the major industry changes and more restrained market sentiment have inevitably caused month-to-month fluctuations over the last twelve months.

“Our forecasts are for gross lending to continue to grow over the next two years and this reflects our belief that there are more stable conditions in the market than a year ago.”

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