Home-owner house purchase lending in May increased month-on-month totalling 57,900 loans, up 9% compared to April, the Council of Mortgage Lenders has reported. The value of these loans totalled £9.6bn, also a rise of 9% on April. Compared to May 2013, the number of loans increased by 13% and the value of lending by 25%.
First-time buyers took out 26,800 loans in May, up 9% compared to April and 19% more than in May 2013. The total value of these loans was £3.9bn, which was up 11% on April and 30% on May last year.
First-time buyer affordability changed fractionally, with first-time buyers typically borrowing 3.43 times their gross income, compared to 3.42 in April. The typical loan size for first-time buyers was £123,200 in May, up from £121,500 in April. The typical gross income of a first-time buyer household remained unchanged at £37,000 compared to April.
The relatively low level of interest rates means borrowers’ payment burden remains relatively low at 19.5% of gross income being spent to cover capital and interest payments, this remained unchanged from April but up from 19.3% in May 2013.
The number of loans advanced to home movers for house purchase totalled 31,100 in May, up 8% compared to April and 9% compared to May 2013. Home mover loans totalled £5.7bn in value in May, which was up 8% on March and up 21% on May last year.
Home-owner remortgage activity in May totalled 21,600 remortgage loans advanced in the period. Unlike house purchase loans, the number of remortgage loans declined in May compared to April, down 18% and down 26% on May last year. These loans totalled £3.3bn in value, a decrease of 18% month-on-month and down 15% compared to May 2013.
Buy-to-let lending in May totalled £2.2bn, representing 16,000 loans. This was up 4% in number of loans compared to April and up 5% in value. Compared to May 2013, this was a 14% increase by volume and 22% by value.
Within the overall total of buy-to-let loans, 8,700 were for house purchase and 7,100 for remortgage. The total number of buy-to-let house purchase loans was up 7% compared to April and up 21% compared to May last year. The loans totalled £1.1bn in value, up 10% month-on-month and up 38% on May last year.
The number of remortgage loans declined slightly compared to April, down 1% in total number of loans but up 6% compared to May last year. These loans had a total value of £1.1bn, unchanged on April but up 22% compared to May last year.
Paul Smee, director general of the CML, said: “With May lending figures, we get our first glimpse at the effect the Mortgage Market Review has had on lending trends and, at least so far, the impact appears subtle, rather than dramatic. First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted.
“There was no cliff edge; lenders and intermediaries had been methodically working towards applying MMR changes for months leading up to implementation and the figures appear to reflect this.”
