Gross mortgage lending in May was £15.9bn, up from £15.8bn in April but down from £16.8bn in May last year, the Council of Mortgage Lending (CML) has stated.
The number of loans and value for home-owner house purchase remained steady in May, showing a slight month-on-month increase, but was down compared to a year ago.
The typical income multiple peaked in May 2014 with the average mortgage loan equating to 3.28 times gross income. It has since trended downwards and currently stands at 3.17.
Overall, the value of home-owner loans for house purchase accounted for 53% of gross lending, while remortgage activity accounted for 23%. Home-owner loans as a share of gross lending has increased since the new year while remortgage activity has edged down.
Competitive mortgage rates mean first-time buyers are paying a record low proportion of their monthly income to service the capital and interest rate payments of their mortgage. This is the lowest level since we began tracking this in 2005.
The amount of monthly gross household income spent to pay capital and interest repayments was 17.7%, down on last month and the same period last year. Like first-time buyers, this is the lowest it has been since we began tracking this data in 2005.
Remortgage activity fell 10% in both amount borrowed and volume of loans in May compared to April. It also dipped in comparison to May last year continuing the relatively subdued home-owner remortgage activity levels seen since around 2009.
Overall, gross lending for buy-to-let in May showed little change on April. But it was up on May last year, reflecting increased levels of remortgage activity in the buy-to-let sector seen since the beginning of the year.
Paul Smee, director general of the CML, said: “House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter. Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Activity in the housing market has failed to reach the levels anticipated at the start of the year and this picture is backed up by today’s CML data. One area where activity has been particularly slow is remortgaging. With many banks currently offering historically low interest rates to consumers now is great time for those coming to the end of their mortgage deal to look for a new rate.
“Although the base rate is still being held, banks will likely price in a rise before the Bank of England actually announces one. Consumers who wait for this to act will find that all the best mortgage deals have already gone. Brokers therefore have a responsibility to speak to clients coming to the end of their deals to make them aware that now is the time to be thinking about remortgaging.”