The total number of loans advanced to home-owners for house purchase decreased in November, down 1% compared to October but up 15% on November 2012, the Council of Mortgage Lenders (CML) has reported.
Overall, 60,000 loans were advanced in November with a total in value of £9.4bn, which was a decrease of 2% by value on October but a 22% year-on-year monthly increase. This is the fourth highest monthly lending amount for home-owner house purchase since December 2007.
There were 27,000 loans to first-time buyers in November, a slight increase of 0.7% compared to October and up 24% compared to October 2012. These loans totalled £3.7bn in value which was exactly the same as October figures but an increase of 37% compared to November 2012.
The typical first-time buyer income multiple declined slightly, with first-time buyers typically borrowing 3.35 times their gross income, compared to 3.36 in October. The typical loan size for first-time buyers was £116,913 in November, again a decrease from £119,500 in October. In parallel to this, the typical income of a first-time buyer household fell slightly to £35,848, which was down 1.7% from £36,465 in October.
The continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.1% of gross income to cover capital and interest payments, lower than the 19.3% in October and on par with the lowest recorded monthly figure since 2005 recorded in April 2012 and April 2013.
The number of loans advanced to home movers for house purchase totalled 33,000 in November, down 2.4% in volume compared to October but up by 8% compared to November 2012. Home mover loans totalled £5.7bn in value in November, which was down from £5.9bn in October but up from £4.9bn in November 2012.
Home-owner remortgage activity decreased in November with a total of 27,500 remortgage loans advanced in the period, down 3% in volume compared to October but up 4% compared to November 2012. These loans totalled £4.1bn in value, a slight decrease of 2% on October but up 21% compared to November 2012.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “After October’s stonking performance on the lending front, November was more muted but still up significantly compared with the previous year. The overall picture continues to improve with confidence strong and an increasing number of buyers and movers taking advantage of some rock-bottom mortgage rates.
“Lenders are certainly keen to lend, particularly before the introduction of the Mortgage Market Review at the end of April which it is feared might slow things down. The new year has got off to an extremely busy start, with the Help to Buy scheme playing a big part in encouraging first-time buyers to get on the housing ladder. However, beyond the scheme, lenders are offering high loan-to-value deals at even more competitive rates, so there is plenty of choice available.
‘With the consumer prices index falling to the 2% target, any pressure to raise interest rates in the short term has been relieved. Interest rates are not expected tto rise this year which will further fuel confidence among buyers. However, it’s important that borrowers plan ahead and budget for when interest rates do rise to ensure they can afford to pay their mortgage.”
Buy-to-let lending in November totalled 16,200 loans advanced, which was unchanged on October. The value of these loans totalled £2.1bn, which was also unchanged from October.
Buy-to-let loans for house purchase decreased slightly in November to 8,400 loans advanced, down 1.2% compared to October. The loans totalled £1bn in value, the same as in October.
Buy-to-let remortgage lending increased slightly in November to 7,700 loans, up 1.3% compared to October. These buy-to-let remortgages had a total value of £1.1bn, the same as in October.
Karen Bennett, sales and marketing director of commercial mortgages at Shawbrook Bank, said: “The property market is continuing to show real signs of recovery – boosted by the buy-to-let sector. Looking around the sector, lenders are bringing a range of new products to the market in response to this demand and we are seeing some real innovation. However, we still need to be aware of the need for a responsible and sustainable industry.
“The new products aimed at property investors need to take into account interest rate rises when they occur. The forthcoming MMR guidelines show the importance of stress testing throughout the mortgage industry. This includes commercial mortgages, and property investors need to ensure that their property portfolios will generate enough income to cover mortgages once interest rates go up.”
Paul Smee, director general of the CML, said: “The Bank of England’s credit survey reported demand in the final quarter of 2013 for house purchases was rising at its fastest pace since the survey began in 2007.
“This is a significant shift in public mood and, with strong November lending continuing the year-on-year growth seen since April 2013, this should be expected to continue into the New Year.”