The Bank of England says the proportion of lending for house purchase in the last three months of 2015 was 69.3%, approximately 0.8 percentage points lower than in Q3 2015.
The value of gross advances for house purchase was 20.2% higher than Q4 2014 at £43.7 billion.
Meanwhile, the proportion of lending to first time buyers increased in the quarter by 0.5 percentage points to 20.9%. The value of residential loans advanced to first time buyers increased by £2.0 billion from Q4 2014 to £13.2 billion in Q4 2015.
The buy-to-let proportion of lending increased from 15.6% in the third quarter of 2015 to 15.9% in the final quarter; buy-to-let lending also increased by 1.0 percentage points from Q4 2014. Buy-to-let advances (which include buy-to-let remortgages) increased over the past year from £7.7 billion advanced in Q4 2014 to £10.0 billion in Q4 2015 which is the highest since 2007. buy-to-let balances outstanding were £178.2 billion in Q4 2015, which, at 14.7% of total residential balances is the highest proportion since the series began in 2007.
The proportion of remortgages increased from 24.1% in Q3 2015 to 25.0% in Q4 2015. The proportion of other new lending increased from 3.4% in Q3 2015 to 3.5% in Q4 2015.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “There is clearly strong appetite for new business among lenders, with the Bank of England’s data showing gross advances were over a fifth higher in Q4 2015 than a year earlier.
“Borrowers are also benefiting from lower mortgage rates, with the average rate at the lowest point since the Bank of England began recording this in 2007. Low rates ease the burden of repayments, making now a great time to get a mortgage for those who already have a deposit saved.
“The base rate has now been at 0.5% for seven years, meaning many recent borrowers have never experienced an increase in their monthly mortgage rate. However, borrowers are still opting for the security of locking into rock-bottom rates before they disappear, with the proportion opting to fix rising by over 3% in the final quarter of 2015.
“Borrowers who haven’t yet managed to save for a deposit may face more difficulties. The number of loans with a higher loan-to-value (LTV) ratio has been declining – meaning borrowers have to raise larger deposits in order to access the housing market. With prices continuing to rise, it is important that homeownership is supported through the provision of higher LTV products. It is positive to see that lending to first-time buyers has increased over the last 12 months however, and the Government has shown its willingness to support aspiring homeowners through affordability schemes such as Help to Buy.”