The Council of Mortgage Lenders (CML) has revealed that homeowners borrowed £10.5bn for house purchase in October, down 8% month-on-month and 11% year-on-year.
They took out 57,800 loans, down 8% on September and 13% on October 2015.
First-time buyers borrowed £4.5bn, down 8% on September and 2% on October last year. This equated to 28,900 loans, down 8% month-on-month and 4% year-on-year.
Meanwhile, the CML said home movers borrowed £5.9bn, down 9% on a month ago and 18% compared to a year ago. This represented 28,900 loans, down 8% month-on-month and 20% on October 2015.
Remortgage activity totalled £6.1bn, up 11% on September and 7% compared to a year ago. This came to 34,700 loans, up 10% month-on-month and 5% compared to a year ago.
In addition, landlords borrowed £3bn, up 7% month-on-month but down 21% year-on-year. This came to 18,600 loans in total, up 2% compared to September but down 25% compared to October 2015.
The amount borrowers are paying as a percentage of their household income to service capital and interest rates reached an another historic low this month for both first-time buyers and home movers at 17.6%.
Affordability metrics for first-time buyers saw the typical loan size remain unchanged from September at £133,200 in October. The average household income decreased slightly from £40,200 in September to £40,000 in October. This meant the income multiple went from 3.53 to 3.56.
The average amount borrowed by home movers in the UK increased to £171,700 in October from £171,000 in September, while the average home mover household income decreased slightly to £54,900 from £55,100. The income multiple for the average home mover remained the same month-to-month at 3.26.
On a seasonally adjusted basis, most lending trends were relatively similar. However, first-time buyer loans by value increased by 10% year-on-year, compared to a decrease of 2% on a non-seasonally adjusted basis.
Remortgage loans saw an increase month-on-month and year-on-year by volume and by value. This is the highest amount of loans taken out for remortgage since January 2009.
Number of loans to home-owners, 2007-2016:
Gross buy-to-let lending increased in October compared to September but lending remained down on 2015 levels due to the changes to stamp duty on second properties introduced in April. Nearly two thirds of buy-to-let loans were remortgages rather than house purchase.
Paul Smee, director general of the CML, said: “Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April. With lenders now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.
“Home-owner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009. This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut.”
