48,200 loans were taken out for house purchase in September, worth £7.1 billion, down 2% by number and 5% by value compared to August but up 3% by number and value compared to September 2010, according to the Council of Mortgage Lenders (CML).
There were 34,200 remortgage loans advanced, worth £4.3 billion. This represented a 1% decline on August (with no change in value) but a 25% increase (26% by value) on a year ago.
The third quarter overall saw 144,200 loans (worth £21.6 billion) for house purchase, up 16% by volume and 21% by value from the second quarter. However this was 6% lower than the activity levels in the same period last year. In contrast remortgaging from July to September saw both quarterly and annual growth, with the 100,300 remortgage loans (worth £12.6 billion) taken out representing a 23% rise in volume compared to the third quarter of 2010 (24% by value).
The CML said the decline in house purchase lending in September was driven entirely by a drop in home mover activity. There were 30,100 loans to home movers in September (worth £4.9 billion), down from 31,400 (worth £5.3 billion) from August. But in contrast, first-time buyer numbers rose in September. The 18,200 loans (worth £2.2 billion) taken out by first-time buyers represented an increase from 18,000 (no change by value) on August.
Alongside the increase in activity, affordability continued to ease for first-time buyers. In September, interest on a new first-time buyer loan typically consumed 12.7% of the borrower’s income, down from 13.0% in August. This reflects the mortgage price easing, particularly in the 80%-90% loan-to-value bracket, that has accompanied greater loan availability at these levels. Home movers on average paid the lowest proportion of their income since monthly records began in 2002 (9.4%) on mortgage interest payments for the second month running.
Since June, nearly all loans to first-time buyers (96%) have been taken out on a repayment basis. However the proportion of home mover and remortgage loans taken out on a repayment basis continues to increase. In September, 82% of home movers and 78% of remortgage loans were on a repayment basis, up from 81% and 76% respectively in August. We expect this trend to continue as yesterday’s first-time buyers – virtually all of whom have repayment mortgages – become tomorrow’s home movers and remortgagors.
Paul Smee, the CML’s director general, said: “Although both house purchase and remortgage loans experienced a small drop in September the overall market to date shows a stable picture. However
