News Column

First-Time Buyers Took Out 6,600 More Loans in April than a Year Ago

June 12, 2014



LONDON, June 12 -- The Council of Mortgage Lenders issued the following news release:

New CML data released today on the profile of UK lending in April 2014, including first-time buyer, home mover, remortgagor and buy-to-let lending, shows:

* The number of loans to first-time buyers rose by only 1% in April compared to March, but was 37% higher than in April 2013. By value, lending to first-time buyers was up 3% on March and 52% higher than in April last year.

* The number of loans to home movers increased in April by 11%, with the value up 15% compared to March. Compared with April 2013, growth was up 30% by volume and 47% in value.

* Total number of loans for home-owner house purchase (first-time buyers and home movers) increased month-on-month by 6% and 11% by value on March, with year-on-year growth in number of loans up 33% and 47% by value.

* Total number of loans for remortgage in April was up 6% and 11% by value compared to March.

* Total number of buy-to-let loans declined slightly month-on-month down 1% in April but the value remained unchanged. Compared to April 2013, there was a 43% increase in number of loans and a 57% increase in overall value

The Bank of England reported earlier this month gross UK mortgage lending was GBP16.5 billion in April, an 8% increase compared to March and 35% higher than the total of GBP12.2 billion in April last year.

Lending for home-owner house purchase

Home-owner house purchase lending in April increased month-on-month as lending continued to recover from the usual seasonal dip seen at the beginning of the year. In total, 53,200 loans were advanced for house purchase, up 6% compared to March, and the value of these loans totalled GBP8.8bn, a rise of 11% on March.

Compared to April 2013, the number of loans increased by 33% and the value of lending by 47%.

Chart 1: Number of loans for home-owner house purchase per month

See chart here (http://www.cml.org.uk/cml/media/press/3938)

Table 1: Loans for home-owner house purchase and remortgage

See table here (http://www.cml.org.uk/cml/media/press/3938)

Lending to first-time buyers

First-time buyers took out 24,500 loans in April, up only slightly by 1% compared to March but 37% more than in April 2013. The total value of these loans was GBP3.5bn, which was up 3% on March and 52% on April last year.

First-time buyer affordability worsened fractionally, with first-time buyers typically borrowing 3.42 times their gross income, compared to 3.41 in March. The typical loan size for first-time buyers was GBP121,500 in April, up from GBP118,750 in March and represents the highest monthly average advance for first-time buyers on record. In parallel to this, the typical income of a first-time buyer household increased to GBP37,000, up from GBP35,704 in March, which was also the highest average income on record.

The relatively low level of interest rates means borrowers' payment burden remains relatively low at 19.4% of gross income being spent to cover capital and interest payments, up from 19.2% in March and 19.1% in April 2013.

Chart 2: Number of loans advanced to first-time buyers per month

See chart here (http://www.cml.org.uk/cml/media/press/3938)

Table 2: First-time buyers, lending and affordability

See table here (http://www.cml.org.uk/cml/media/press/3938)

Lending to home movers

The number of loans advanced to home movers for house purchase totalled 28,700 in April, up 11% compared to March and 30% compared to April 2013. Home mover loans totalled GBP5.3bn in value in April, which was up 15% on March and up 47% on April last year.

Chart 3: The number of loans advanced to home movers per month

See chart here (http://www.cml.org.uk/cml/media/press/3938)

Table 3: Home movers, lending and affordability

See table here (http://www.cml.org.uk/cml/media/press/3938)

Lending to home owners for remortgage

Home-owner remortgage activity in April totalled 26,300 remortgage loans advanced in the period. Unlike house purchase loans, the number of remortgage loans did not show an increase, but remained unchanged, in April compared to April 2013. However, it was 6% higher than in March. These loans totalled GBP4bn in value, an increase of 11% month-on-month and up 18% compared to April 2013.

Chart 4: Number of loans advanced for remortgage per month

See chart here (http://www.cml.org.uk/cml/media/press/3938)

Lending for buy-to-let

Buy-to-let lending in April totalled GBP2.2bn, representing 16,200 loans. This was virtually identical to March, but up 43% by volume and 57% by value compared to April last year.

Within the overall total of buy-to-let loans, 8,400 were for house purchase and 7,600 for remortgage. The total number of buy-to-let house purchase loans was up 3% compared to March and up 49% compared to April last year. The loans totalled GBP1bn in value, up 2% month-on-month and up 61% on April last year.

The number of remortgage loans was 6% lower than in March, but up 38% on April last year. These loans had a total value of GBP1.2bn, up 3% on March and 60% compared to April last year.

Chart 5: Number of buy-to-let loans advanced for house purchase and remortgage per month

See chart here (http://www.cml.org.uk/cml/media/press/3938)

Table 4: Loans for buy-to-let house purchase and remortgage

See table here (http://www.cml.org.uk/cml/media/press/3938)

Paul Smee, director general of the CML, commented:

"First-time buyers and home movers continue to be key drivers in the growth of the market and, despite fears that MMR preparations may hinder this momentum, we have seen a continued year-on-year upward trend every month in 2014. The UK picture continues to mask a disparate set of varied local conditions, but overall we expect lending levels to continue to build on the foundation of growth we have seen over the past 12 months."

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