UK Finance has reported that total mortgage lending declined in September but remained higher than in the same month in 2016.
First-time buyers borrowed £5.1 billion, down 11% on the previous month but 4% higher than in September 2016. This equated to 31,100 loans, down 10% month-on-month and 1% year-on-year.
Meanwhile, home movers borrowed £6.9 billion, down 18% on August but 6% higher year-on-year. This equated to 32,200 loans, down 17% month-on-month but three% higher than a year ago.
UK Finance also found that home-owner remortgage activity totalled £6.4 billion, the same amount as in August but 16% higher than a year ago. The number of remortgage loans totalled 35,900, 3% lower month-on-month but 13% higher than a year ago.
In addition, gross buy-to-let lending totalled £2.9 billion, down 9% on August but 4% higher than in September 2016. That equated to 18,900 mortgages, down 8% month-on-month but up 4% year-on-year.
UK Finance also said that mortgage lending in the third quarter rose. Home buyers borrowed £38.2 billion, up 11% on the second quarter of the year and 12% on the third quarter of 2016. This equated to 199,600 loans, up 9% on the second quarter and 7% on the same period last year.
Within this, first-time buyers borrowed £15.7 billion, up 5% on the last quarter and nine% on the third quarter of 2016. They took out 95,800 mortgages, up 4% quarter-on-quarter and 5% year-on year.
Home movers borrowed £22.4 billion, up 14% on the second quarter and year-on-year. This equated to 103,800 loans, up 13% quarter-on-quarter and 9% compared to a year ago.
Home-owner remortgage activity totalled £19.5 billion, up 14% by value on the second quarter and 11% on a year ago. The number of remortgage loans totalled 110,000, up 12% quarter-on-quarter and 10% on a year ago.
Gross buy-to-let lending totalled £9.3 billion, up 11% on the second quarter and 4% on the second quarter of 2016. This equated to 60,000 mortgages, up 8% on the previous quarter and 6% year-on-year.
June Deasy, UK Finance’s head of mortgage policy, said: “Although lending slackened in September, it remained higher than a year ago. Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November. Over the last year, the number of loans for remortgaging has been higher than in any period since 2009. Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point. While this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.”
On a seasonally adjusted basis, lending to first-time buyers and movers was higher than in August, and there were year-on-year increases by volume and value. Remortgaging held up month-on-month and was stronger than a year ago as borrowers sought to fix their mortgage costs ahead of a widely anticipated increase in Bank base rate. Buy-to-let borrowing for house purchase declined in September but was at the same level year-on-year.
The proportion of household income used to service capital and interest repayments declined in September for both first-time buyers and home movers to 17.3%% and 17.5% respectively.
The typical loan size for a first-time buyer declined from £140,000 in August to £138,016 in September. Their average household income also declined but by a smaller amount proportionately, from £41,259 to £40,826. That meant the income multiple edged down from 3.63 to 3.61.
The average amount borrowed by home movers in the UK declined from £182,785 the previous month to £180,000, and the average mover household income declined month-on-month from £56,102 to £55,581. This meant that the average income multiple went down from 3.40 to 3.39.