Homeowner Purchase Lending Up 16% in March

Last week, the Council of Mortgage Lenders (CML) revealed new figures on the lending market in March and the first quarter (Q1) of 2015, split up into trends for first time buyers, home movers, remortgages and buy-to-let.

Director General of the CML, Paul Smee, says: “It was a slow start to activity in the first couple of months of 2015, but the market started to get out of the dip in March, a trend that we think will continue as the year goes on.

“We will have to wait and see how the housing market reacts to the general election result and the reduction in the risk of a prolonged period of market uncertainty which could well have been damaging to businesses and the housing market.”¹

Gross mortgage lending hit £16.1 billion in March, an 18% rise on February’s total and 5% more than lending in March 2014. Gross lending for the whole of Q1 2015 was £44.5 billion, down 13% on Q4 2014 and a year-on-year decline of 4% on Q1 2014.

Homeowner house purchases

Lending for homeowner house purchases grew monthly in volume to 48,200 in March, a 16% rise on February, but a 4% decrease on March 2014. These loans reached £8.2 billion, up 17% on February and 4% annually.

In Q1 2015, loans advanced to homeowner for house purchases totalled 131,800, a 24% drop on Q4 2014 and 11% down on Q1 2014. These loans were worth £22.4 billion, down 23% on the previous quarter and a 5% fall on a yearly basis.

First time buyer purchases

First time buyers borrowed an average 3.36 times their gross income in March this year, the same as February. The typical loan size rose monthly to £123,290 in March, up from £122,285 in the previous month. The average gross income of a first time buyer household increased slightly to £38,500 in March from £38,085 in February.

First time buyers paid 18.8% of their gross income towards capital and interest payments in March, down from 19.1% in February, and much less than the peak seen in December 2007 of 24.8%.

In quarterly terms, first time buyers borrowed 3.37 times their gross income in Q1 2015, down from 3.38 in Q4 2014.

Homeowner Purchase Lending Up 16% in March

The average loan size for this type of buyer also dropped to £122,794 in Q1 2015 from £124,450 in Q4 2014. The typical gross income of a first time buyer household fell marginally to £38,139 from £38,324 in the previous quarter.

In Q1, first time buyers paid 19% of their gross income towards capital and interest payments, down from 19.2% in Q4 2014.

Home mover lending

Home movers were advanced mortgage loans 3.07 times their gross income in March, a slight rise from the 3.06 seen in February. The average loan size for home movers was £160,615 in March, up from £157,730 in February. The gross household income of a typical home mover was £54,135 in March, up from £53,514 in the previous month.

Home movers spent 18.3% of their gross income on monthly capital and interest payments in March, down from 18.5% in February and much lower than the 23.8% seen in December 2007.

In Q1 2015, home movers borrowed 3.06 times their gross income, a slight rise from 3.03 in Q4 2014. The average loan size also increased to £158,440 from £153,500 in the previous quarter. The typical gross income of a home mover household grew to £53,554 from £53,173.

Home movers paid 18.5% of their gross income on capital and interest payments in Q1, up from 18.4% in Q4 2014.

Remortgages

Remortgage lending rose monthly in March, with 26,600 loans advanced, up 19% on February and a 6% increase on March 2014. The value of these loans reached £4.2 billion, a 24% monthly rise. Annually, this was up 14% on March 2014.

In Q1 2015, remortgage lending grew 3% on the previous quarter to reach 75,400 loans. This was down 5% on the same quarter in 2014. The value of these loans also rose quarterly by 6% to £11.8 billion, up 2% annually compared to Q1 2014.

Buy-to-let lending

In March, 18,200 buy-to-let loans were advanced, a 12% increase on February and 21% up on March 2014. These loans reached a total of £2.7 billion, up 13% on February and 35% year-on-year.

The amount of buy-to-let loans for home purchases was 8,600 in March, an 8% rise on February and 13% higher than March 2014. These loans were worth £1.2 billion, a 20% monthly increase and 33% annual growth.

The number of buy-to-let remortgages rose 15% in March from February, hitting 9,400, a 29% increase on March 2014. The value of these loans was £1.4 billion, an 8% monthly rise and 27% growth on March 2014.

Q1 2015 saw buy-to-let lending accounting for 18% of all lending in the UK, the highest percentage of gross lending since quarterly records began in mid-2006. This was caused by a drop in remortgage and house purchase loans.

52,300 buy-to-let loans were advanced in Q1, down 3% on Q4 2014 but a 15% increase on the same quarter in 2014. These loans were worth £7.8 billion, up 1% on Q4 2014 and a 28% rise yearly.

Within this, 24,440 loans were for buy-to-let home purchases and the amount of loans for buy-to-let remortgages was 27,370, down 8% and up 2% correspondingly compared to Q4 2014. In Q1 2015, these buy-to-let loans rose 6% for house purchases and 23% for remortgages.

Loans for buy-to-let property purchases were worth £3.3 billion, down 8% on Q4 2014, but up 6% on Q1 2014. Buy-to-let remortgage loans stayed at £4.2 billion, an annual rise of 29%.

¹ http://www.cml.org.uk/cml/media/press/4205