News Column

First-Time Buyers in Wales up by Almost a Third in Second Quarter of 2014

August 27, 2014



LONDON, Aug. 27 -- The Council of Mortgage Lenders issued the following news release:

New CML data on the characteristics of lending in Wales in the second quarter of 2014 show it remains driven primarily by lending for house purchase, with first-time buyers in particular showing strong year-on-year growth.

Quarterly highlights:

* In the second quarter, there were 3,300 first-time buyer loans in Wales - 32% up on the previous quarter, and 27% up on Q2 2013. First-time buyers in the period borrowed GBP 340 million - up 31% on the previous quarter and on Q2 2013.

* There were 3,500 home-mover loans in the second quarter, up 17% on the previous quarter and 9% more than in Q2 2013. Total value of these loans was GBP 440 million, up 16% on the first quarter and up 13% on the second quarter 2013.

* Remortgage lending in the quarter declined in Wales compared to the previous quarter and the same quarter in 2013.

Lending for home-owner house purchase

House purchase lending to home-buyers increased quarter-on-quarter in Wales totalling 6,800 loans, up 24% compared to the first quarter and the value of these loans totalled GBP 790 million, a rise of 23% on the first quarter. Compared to the second quarter of 2013, the number of loans increased by 17% and value of these loans increased by 23%.*

Chart 1: House purchase lending in Wales: Year-on-year % change in Wales compared and the UK

Click here to view graph (http://www.cml.org.uk/cml/files/images/26.08.14-wales-house-purchase.png)

Lending to first-time buyers

First-time buyer affordability changed fractionally, with first-time buyers typically borrowing 3.23 times their gross income, which was less than the UK average of 3.46 and slightly changed from 3.24 in the first quarter. The typical loan size for first-time buyers was GBP 99,000 in the second quarter, up from GBP 98,000 in the previous quarter. The typical gross income of a first-time buyer household was GBP 30,400 compared to GBP 30,100 in the first quarter.

The relatively low level of interest rates saw first-time buyers' payment burden remaining relatively low in the second quarter at 18.2% of gross income being spent to cover capital and interest payments, a smaller proportion of income than the 19.4% UK average and slightly changed from 18.3% in the first quarter.

Chart 2: Lending to FTBs in Wales, number of loans advanced, and lending to FTBs in Wales as a proportion of the UK total

Click here to view graph (http://www.cml.org.uk/cml/files/images/26.02.2014-wales-ftbs-graph.png)

Lending to home movers

In the second quarter of 2014, lending to home movers showed similar growth patterns in Wales to first-time buyer lending although at a slower rate of growth. Home mover affordability changed fractionally, with home movers typically borrowing 2.82 times their gross income compared to 3.09 for the UK overall and 2.74 in the first quarter. The typical loan size for home movers was GBP 117,900 in second quarter, up from GBP 112,500 in the previous quarter. The typical gross household income for home movers was GBP 42,240 in second quarter compared to GBP 42,000 in first quarter.

Home movers' payment burden remained relatively low in Wales at 17.2% of gross income being spent to cover monthly capital and interest payments, less than the 18.7% UK average and 17.3% seen in the first quarter.

Lending to home owners for remortgage

Remortgage lending in Wales declined both quarter-on-quarter and year-on-year. Home-owner remortgage lending in the second quarter totalled 3,100 loans advanced in the period, which was a decrease of 9% on first quarter and down 18% on the second quarter 2013. These loans totalled GBP 310m in value, a decrease of 11% quarter-on-quarter and down 14% compared to Q2 2013.

Chart 3: Remortgage lending in Wales compared to the UK, year-on-year % change

Click here to view graph (http://www.cml.org.uk/cml/files/images/26.08.14-wales-remortgage.png)

Peter Hughes, chair of CML Cymru, commented:

"With new FCA mortgage market rules being introduced in this quarter, there was potential for a period of adjustment as the market adapts to the new rules, however, this does not seem to be the case in Wales. First-time buyers and home movers have shown substantial growth on the previous quarter and compared to this period last year. The affordability constraints are less in Wales compared to the UK overall, which suggests there are relatively favourable conditions for those looking to own a home."

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