Gross UK mortgage lending rose 12% in July to £16.7 billion, up from £14.9 billion in June and 29% on last July, according to the Council of Mortgage Lenders (CML).
Survey results published by the CML show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.
Lending for home-owner house purchase
Total home-owner house purchase loans (both movers and first-time buyers) continued to show the resilience and growth seen throughout 2013. 57,400 house purchase loans were advanced in July, an increase of 9% on June and up by 21% on July last year. These loans had a total value of £9.1bn, which was an increase of 12% on June and 23% compared to July last year.
Table 1: Loans for house purchase and remortgage
Number of house | Value of house | Number of | Value of remortgage | |
July | 57,400 | 9,100 | 27,000 | 3,800 |
Change from | 8.9% | 12.3% | 5.5% | 8.6% |
Change from | 21.1% | 23.0% | 7.6% | 15.2% |
Lending to first-time buyers
The strong growth in lending to first-time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first-time buyers, worth £3.5bn. By value, first-time buyer lending was 6% up on June and 46% up on July last year.
The typical first-time buyer loan size stayed almost unchanged from June at £117,038, while average first-time buyer household income increased to £36,142 from £35,873 in June.
Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first-time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments (capital and interest) accounted for 19.2% of income, down from 19.3% in June.
Table 2: First-time buyers, lending and affordability
Number of loans | Value of loans £m | Average loan to value | Average income multiple | Proportion of income spent on interest payments | Proportion of income spent on capital and interest payments | |
July | 25,300 | 3,500 | 82% | 3.31 | 11.8% | 19.2% |
Change from | 5.4% | 6.1% | 80% | 3.33 | 12.1% | 19.3% |
Change from | 40.6% | 45.8% | 81% | 3.24 | 13.7% | 20.0% |
Lending to home movers
Lending to home movers showed strong growth in July, with 32,000 loans advanced – up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6bn, an increase of 17% compared to June and 12% compared to July last year.
The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.
Table 3: Home movers, lending and affordability
Number of loans | Value of loans £m | Average loan to value | Average income multiple | Proportion of income spent on interest payments | Proportion of income spent on capital and interest payments | |
July | 32,000 | 5,600 | 70% | 2.92 | 8.8% | 18.3% |
Change from | 11.9% | 16.7% | 70% | 2.91 | 9.0% | 18.2% |
Change from | 9.2% | 12.0% | 69% | 2.89 | 10.2% | 19.3% |
Lending to home owners for remortgage
Lending to home-owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8bn was advanced in July to home-owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.
Remortgage activity reported by CML is likely to increase in the coming months – Bank of England approvals data showed a 40% increase in July.
Lending for buy-to-let
Lending for buy-to-let has continued to follow an upward trend, similar to the market overall. 15,200 buy-to-let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.
Lending for buy-to-let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.
Table 4: Loans for buy-to-let house purchase and remortgage
Number of BTL house | Value of BTL house | Number of BTL | Value of BTL remortgage | |
July | 7,600 | 900 | 7,200 | 1,100 |
Change from | 6.7% | 12.5% | 13.4% | 23.6% |
Lending for buy-to-let remortgage
There was strong growth in buy-to-let remortgage lending which increased by 24% in July compared to June, a value of £1.1bn. This equated to 7,200 loans in July for buy-to-let remortgage in total, an increase by 13.4% on June 2013.
Paul Smee, director general of the CML, said: “The notable feature is the catch-up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing.”
