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Mortgage advances pick up in the third quarter says CML



Lending in September:
  • First-time buyers saw month-on-month and year-on-year increases in activity by volume and by value in September. 
  • Home mover lending by contrast saw a dip in September compared to August, but grew by volume and by value compared to a year ago.
  • Home-owner remortgage activity rebounded after a dip in August to increased levels in September both compared to a month ago and the same time last year. 

Buy-to-let saw year-on-year increases by volume and by value in both buy-to-let house purchase and buy-to-let remortgage.
Lending in the third quarter 2015:
  • First-time buyers increased in number of loans advanced and amount borrowed both in comparison to quarter two and the third quarter last year. 
  • Home mover lending saw a similar trend to first-time buyers but the percentage increases by volume and by value were higher. 
  • Home-owner remortgage activity saw an increase compared to the second quarter of the year, but a more substantial increase compared to the third quarter 2014. 
  • Buy-to-let saw large quarter-on-quarter and year-on-year increases by number of loans and amount borrowed. 

Paul Smee, director general of the CML, commented:
The market was a slow starter this year, but this quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the new year.

Buy-to-let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first-time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy-to-let landlords in September, and the growth in buy-to-let lending largely continues to reflect its more belated recovery from recession
.
Chart 1: Loans to home-owners and for buy-to-let by value
Sept 2015 MLT Chart 1


Source: CML Regulated Mortgage Survey (April 2005 onwards), CML Economics

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Chart 2: Number of loans for house purchase and proportion of FTBs and home-movers
Sept 2015 MLT Chart 2

Source: CML Regulated Mortgage Survey (April 2005 onwards)

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Lending for house purchase and remortgage

Table 1: September lending for home-owner house purchase and remortgage
 No. of house purchase loans% change by volumeValue of house purchase loans, £m% change by valueNo. of remortgage loans % change by volumeValue of remortgage loans, £m% change by value
Sept-1562,300 11,200 31,000 5,100 
Aug-1562,300No change11,300-0.9%25,800+20.2%4,300+18.6%
Sept -1457,600+8.2%9,800+14.3%27,900+11.1%4,300+18.6%


Source: CML Regulated Mortgage Survey (April 2005 onwards)

Table 2: Third quarter lending for home-owner house purchase and remortgage
 No. of house purchase loans% change by volumeValue of house purchase loans, £m% change by valueNo. of remortgage loans % change by volumeValue of remortgage loans, £m% change by value
Q3-15193,600 34,900 88,000 14,600 
Q2 -15164,100+18.0%28,100+24.2%84,400+4.3%13,500+8.1%
Q3-15183,800+5.3%31,600+10.4%75,400+16.7%11,700+24.8%
Source: CML Regulated Mortgage Survey (April 2005 onwards)


House purchase lending in the UK in September saw no change by volume of mortgages advanced compared to August, but there was a dip in amount borrowed month-on-month. However, there was an increase in the number of loans for home-owner house purchase compared to September 2014, the fourth month in a row there has been year-on-year increases. The amount borrowed in September also increased year-on-year, the third month in a row this has been the case.

In the third quarter, house purchase lending grew compared to the second quarter and the third quarter in 2014 by both volume and by value. This was driven by both first-time buyer and home mover activity which both saw quarterly growth.

As previously reported, UK gross lending overall in September totalled £20.1bn, up 3% on August and 13% on September last year. This meant in the third quarter gross lending came to £61.4bn, up 18% on the previous quarter and a 12% rise on the third quarter 2014.

Overall in the third quarter, the value of home-owner loans for house purchase accounted for 57% of gross lending, while remortgage activity accounted for 24%. Buy-to-let as a proportion of total lending was around 18%.


Table 3: September first-time buyer lending and affordability measures
 
No. of loans
% change by volume
Value of loans £m
% change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital & interest payment as % of income
Sept-15
28,600
 
4,300
 
127,800
39,270
82.2%
3.45
9.7%
18.3%
Aug-15
27,500
+4.0%
4,200
+2.4%
129,200
39,572
84.2%
3.45
10.0%
18.5%
Sept-14
26,300
+8.7%
3,900
+10.3%
126,000
38,716
82.9%
3.40
12.0%
19.6%
Source: CML Regulated Mortgage Survey (April 2005 onwards)
Table 4: Third quarter first-time buyer lending and affordability measures
 
No. of loans
% change by volume
Value of loans £m
% change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital & interest payment as % of income
Q3-15
86,800
 
13,200
 
128,108
39,373
83.7%
3.44
9.9%
18.4%
Q2-15
76,500
+13.5%
11,300
+16.8%
125,500
38,729
81.8%
3.38
10.2%
18.4%
Q3-14
82,100
+5.7%
12,200
+8.2%
125,900
38,463
83.9%
3.41
12.0%
19.6%
Source: CML Regulated Mortgage Survey (April 2005 onwards)


Competitive mortgage rates mean first-time buyers continue to pay a record low proportion of their monthly household income to service the capital and interest rate payments of their mortgage at 18.3% in September. This is the equal lowest monthly level, with June 2015, since the CML began tracking this metric in 2005.

By quarter, the third quarter also had the lowest percentage of monthly household income for mortgage capital and interest payments at 18.4%, equal with last quarter. This has decreased as a proportion year-on-year as in the third quarter of 2014 it was 19.6%.
Table 5: September home mover lending and affordability measures
 
No. of loans
% change by volume
Value of loans £m
% change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital & interest payment as % of income
Sept-15
33,800
 6,800 
167,495
55,000
72.2%
3.16
7.5%
18.1%
Aug-15
34,800
-2.9%
 7,100
-4.2%
169,000
55,941
71.9%
3.14
7.5%
18.1%
Sept-14
31,300
+8.0%
5,900
+15.3%
154,974
53,262
70.4%
3.06
9.1%
18.9%
Source: CML Regulated Mortgage Survey (April 2005 onwards)
Table 6: Third quarter home mover lending and affordability measures
 
No. of loans
% change by volume
Value of loans £m
% change by value
Loan size (£)
Income (£)
Loan-to-value
Loan-to-income
Interest payment as % of income
Capital & interest payment as % of income
Q3-15
106,700
 21,600 
167,400
55,349
72.2%
3.14
7.5%
18.1%
Q2-15
87,500
+21.9%
 16,800
+29.0%
160,995
54,033
73.7%
3.09
7.8%
18.0%
Q3-14
101,500
+5.1%
19,300
+11.9%
155,143
53,831
70.7%
3.05
9.0%
18.8%


Source: CML Regulated Mortgage Survey (April 2005 onwards)

Home movers spent 18.1% of their monthly gross household income to pay capital and interest repayments, unchanged from last month but a decrease compared to September 2014.

In the third quarter, home movers spent 18.1% as a proportion of their income to pay capital and interest repayments. This was slightly up from 18.0% in quarter two, but down compared to 18.8% in the third quarter of 2014
.
 Chart 3: Number of home-owner remortgages
Sept 2015 MLT Chart 3
Source: CML Regulated Mortgage Survey (April 2005 onwards)


Remortgage activity saw a rise by volume and by value in September compared to August and September last year. Third quarter remortgage activity also saw increases compared to the second quarter and the same period last year by volume and by value.
Lending for buy-to-let

Gross buy-to-let lending increased substantially in September and in the third quarter, up by volume and by value in comparison to the previous time period and the same time last year. This increase in activity was driven by both buy-to-let house purchase and buy-to-let remortgage activity, although remortgage levels are showing greater growth.

Buy-to-let lending for house purchase showed stronger year-on-year growth than home-owner loans for house purchase for most of the year, which in part is a market recovery response as buy-to-let lending declined more than home-owner lending during the downturn. While loans to home-owners for house purchase declined by 50% in volume terms from 2007 to 2009, buy-to-let loans for house purchase declined 71% in the same period. Buy-to-let currently in September represents 18% of gross lending.

Table 7: September buy-to-let lending

Gross lending buy-to-let
Buy-to-let house purchase
Buy-to-let remortgage

No. of loans
 % change
Value   of loans (£m)
% change
No. of loans
% change
Value   of loans (£m)
% change
No. of loans
% change
Value   of loans (£m)
% change
Sep-15
24,100
 3,700

11,300
 
1,500
 
12,700
 
2,100
 
Aug-15
22,200
+8.6% 3,400
+8.8%
10,500
+7.6%
1,400
+7.1%
11,500
+10.4%
1,900
+10.5% 
Sep-14
17,700
+36.2%2,500 
+48.0%
8,700
+29.9%
1,100
+36.4%
8,900
+42.7%
1,300
+61.5%
Source: CML Economics
Table 8: Third quarter buy-to-let lending 

Gross lending buy-to-let
Buy-to-let house purchase
Buy-to-let remortgage

No. of loans
 % change
Value   of loans (£m)
% change
No. of loans
% change
Value   of loans (£m)
% change
No. of loans
% change
Value   of loans (£m)
% change
Q3-15
71,500
 10,900

33,600
 
4,500
 
37,400
 
6,200
 
Q2-15
58,000
+23.3% 8,800
+23.9%
28,020
+19.9%
3,810
+18.1%
29,400
+27.2%
4,590
+35.1% 
Q3-14
51,900
+37.8%7,300 
+49.3%
26,370
+27.4%
3,270
+37.6%
25,150
+48.7%
3,770
+64.5%
Source: CML Economics
Chart 4: Number of buy-to-let loans for house purchase and remortgage 
 Sept 2015 MLT Chart 4
Source: CML Economics Download the data