The Council of Mortgage Lenders (CML) has reported that while house purchase lending in the third quarter showed a 13% rise, monthly lending has not followed an even path during the same period.
On a monthly basis, September saw substantially lower house purchase lending than August, although remortgaging rose over the month.
Following a particularly strong August, a total of 44,400 house purchase loans were advanced in September, down from 53,900 loans last month and 48,800 loans in September last year.
The third quarter showed a total of 146,500 house purchase loans advanced – a 13% increase compared to the second quarter and similar to the same period last year. Despite the drop in September, increased house purchase lending in July and August fed through to an 8.2% increase in total gross lending in the third quarter compared to the previous quarter.
Table 1: Loans for house purchase and remortgage
| Number of house purchase loans | Value of house purchase loans, £m | Number of remortgage loans | Value of remortgage loans, £m | |
| September 2012 | 44,400 | 6,700 | 24,600 | 3,300 |
| Change from August 2012 | -17.6% | -19.3% | 6.5% | 10.0% |
| Change from August 2011 | -9.0% | -8.2% | -28.3% | -25.0% |
Contributing to this quarterly growth was a rise in lending to first-time buyers and home movers. Lending to first-time buyers increased by 16% (with 57,000 loans advanced) while lending to home movers increased by 12% (with 89,600 loans advanced).
As for the monthly figures in September, lending to first-time buyers fell by 14% compared to August and by 3.2% compared to September last year. There were 17,900 loans to first-time buyers (worth £2.3 billion) compared to 20,700 loans advanced in August.
The average loan-to-value (LTV) ratio remained unchanged for first-time buyers in September at 80%, while loans to first-time buyers accounted for 40% of all house purchase loans. This was a higher proportion than the previous two months, reflecting the larger decline in the number of loans to home movers.
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 | |
| September 2012 | 17,900 | 2,300 | 80% | 3.26 | 13.7% | 20.0% |
| Change from August 2012 | -13.5% | -14.8% | 80% | 3.25 | 13.8% | 20.2% |
| Change from September 2011 | -3.2% | No change | 80% | 3.24 | 12.6% | 19.7% |
The number of loans taken out by home movers fell by 20% compared to August and by 13% on the same period last year. Home movers accounted for 26,500 loans worth £4.5 billion in September, falling from 33,200 loans in August – the highest figure in over two years.
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 | |
| September 2012 | 26,500 | 4,500 | 69% | 2.90 | 10.4% | 19.5% |
| Change from August 2012 | -20.2% | -19.6% | 69% | 2.89 | 10.3% | 19.3% |
| Change from September 2011 | -12.8% | -10.0% | 70% | 2.90 | 9.4 | 19.0% |
Remortgage lending continued to trend below levels seen earlier in the year; there was a monthly rise in September when a total of 24,600 loans (worth £3.3 billion) were advanced for remortgaging, up from 23,100 loans in August. This was still 25% lower by value than September last year.
Despite this increase in September, remortgage lending fell in the third quarter overall. It was 7% lower in the third quarter and 24% down on the same period last year. £9.7 billion was advanced to borrowers remortgaging in the latest quarter, down from £12.7 billion in the third quarter last year.
During the third quarter, proportionally fewer house purchase loans but more remortgages were sold through intermediaries. 53% of loans to first-time buyers were sold via an intermediary in the third quarter, down from 55% in the previous quarter. 45% of remortgage borrowers used an intermediary in the third quarter, up from 41% in the second quarter.
“While lending in September was slow after a particularly strong August, quarterly figures suggest that the underlying picture is more positive,” said CML director general Paul Smee.
“An increase in house purchase approvals indicated by the Bank of England in September suggests that we may see a return to growth in coming months, but it may take some time before a boost from the Funding for Lending scheme is reflected in house purchase completions.”
