Skip to main content

Mortgage Update> lending hits eight-year high ,12 % Higher than 2014



The Council of Mortgage Lenders estimates that gross mortgage lending reached £20 billion in August. This is 8% lower than July’s lending total of £21.7 billion, but 12% higher than August last year (£17.8 billion).






"Mortgage lending is currently enjoying its best spell since 2008, on the back of a pick-up in house purchase and remortgage activity over the summer months.  August’s lending of £20 billion marks the third month in a row of strong year-on-year growth and is the highest August figure since 2007. We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first-time buyers and home movers."Bob Pannell, CML chief economist

July MLT release - Chart Two


Lending in July:
First-time buyers saw a month-on-month increase by volume and by value in activity compared to June and a year-on-year increase compared to July 2014.
Home mover lending saw larger monthly and annual increases than first-time buyers by volume and by value.
Home-owner remortgage activity saw a slight dip month-on-month but substantial increases when compared to the same month in 2014.

Lending for house purchase and remortgage   

Table 1: July lending for home-owner house purchase and remortgage

 Number of house purchase loansPercentage change by volumeValue of house purchase loans, £mPercentage change by valueNumber of remortgage loans Number of remortgage loansValue of remortgage loans, £mPercentage change by value
July-201567,800 12,200  31,00031,0005,100 
June-201563,100+7.4%11,000+10.9% 32,800-5.5%5,300-3.8%
July - 201464,700+4.8%11,200+8.9% 24,600+26.0%3,800+34.2%


Source: CML Regulated Mortgage Survey (April 2005 onwards)

House purchase lending in the UK saw its third consecutive month-on-month growth by volume and by value in July. This was also the second month that volumes and values increased compared to the same month in 2014.

As previously reported, UK gross lending in July totalled £21.7bn, up 8% on June and 12% up on July last year.

Overall in July, the value of home-owner loans for house purchase accounted for 56% of gross lending, while remortgage activity accounted for 24%. The rise in the number of loans for house purchase in July was driven by both first-time buyers and home-movers. However, the increase in volume and value terms for home movers was much stronger than for first-time buyers. This was the highest monthly lending level by volume since November 2007, and by value the highest monthly level since October 2007.

Nevertheless, first-time buyers took up 45% of total house purchase lending, which continues to make up a larger proportion of activity than pre-crisis levels when it made up as little as 30% of the number of loans for house purchases. Buy-to-let as a proportion of total lending was 18% in July.

Table 2: July first-time buyer lending and affordability measures

 
Number of loans
Percentage change by volume
Value of loans £m
Percentage change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital and interest payment as % of   income
July-15
30,200
 
4,600
 
128,000
39,478
84.3%
3.41
10.1%
18.5%
June-15
29,400
+2.7%
 4,400
+4.5%
127,500
39,119
80.2%
3.40
10.0%
18.3%
July-14
28,900
+4.5%
4,300
+7.0%
125,875
38,391
84.6%
3.41
11.9%
19.5%


Source: CML Regulated Mortgage Survey (April 2005 onwards)

This was the highest monthly first-time buyer lending level by volume and value since August 2007. The proportion of first-time buyer gross household monthly income in July to service the capital and interest rate payments of their mortgage rose slightly from 18.3% in June to 18.5%. This is still lower than in July 2014 when it was 19.5%, and much lower than the most recent high of 24.8% in December 2007.
Table 3: July home mover lending and affordability measures
 
Number of loans
Percentage change by volume
Value of loans £m
Percentage change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital and interest payment as % of   income
July -15
37,700
 7,600 
166,280
55,324
72.1%
3.12
7.6%
18.1%
June - 15
 33,700
+11.9%
 6,600
+15.2%
164,995
54,967
73.3%
3.12
7.7%
17.9%
July - 2014
 35,800
+5.3%
6,900
+10.1%
155,045
54,000
71.5%
3.05
8.9%
18.7%


Source: CML Regulated Mortgage Survey (April 2005 onwards)

This was the highest monthly home mover lending level by volume since December 2009, and by value the highest monthly level since November 2007. Home movers spent 18.1% of their monthly gross household income to pay capital and interest repayments, up slightly on last month but down on the same period last year. Like first-time buyers, this is still much lower than the most recent peak of 23.7% in March 2008.


Buy-to-let continues to grow year-on-year and month-on-month, mainly driven by buy-to-let remortgage activity.


The market has shown steady growth in house purchase and buy-to-let over the past few months with general improvements in economic factors across the UK allowing for more people to enter the property market. This positive direction of travel going into the autumn months reinforces our recent revised forecasts that lending levels should continue to grow gradually over the rest of the year after a subdued beginning of the year.Paul Smee, director general of the CML


Chart 1: Loans to home-owners and for buy-to-let by value
 July 2015 MLT press release - Chart one
Source: CML Regulated Mortgage Survey (April 2005 onwards), CML Economics


July MLT release - Chart Two

Source: CML Regulated Mortgage Survey (April 2005 onwards)


Further Reading

Mortgage Lenders and Administrators statistics Bank of England Sept 2015




House price inflation gathers pace as market conditions tighten further August 2015 update


Help to Buy, has helped nearly 120,000 people achieve their aspiration of buying a new home since it was created, latest figures reveal


When building more homes isn't enough in the UK

UK Housing Price Index JULY 2015

Help to Buy >Equity Loan scheme > Help to Buy NewBuy statistics Data to 30 June 2015 England

What Jeremy Corbyn's leadership victory may mean for housing policy in the UK

Newly Elected Labour Candidate, for Mayor of London, Sadiq Khan, outlines his Housing Policies

Marie's Question >Jeremy Corbyn The New Labour Leader
takes his seat in the Houses of Parliament

Weak UK construction data adds to signs of cooling growth

What Jeremy Corbyn's leadership victory may mean for housing policy in the UK

When building more homes isn't enough in the UK

Would a robot replace an estate agent in the future ?

The number of real estate agency UK jobs slowing at a dramatic rate 5000 decline ( 15 year data ) factors

emoov is really moving !

property ecommerce is booming !

Emoov.co.uk to enter US property market Could you sell your home without a real estate agent?

Iconic Building Lincoln House [Former Maharajah Palace and US embassy ] sold to business tycoon $113m

OntheMarket.com complaints continue to The Competition and Markets Authority


FHFA Adopts Final Rule on 2015-2017 Housing Goals for Fannie Mae and Freddie Mac

zoopla.co.uk and rightmove.co.uk primelocation.com subscriptions can be justified

House Prices in UK Overview