UK home owner lending down month on month which CML says is usual winter dip
Thu 14 Jan 2016
Home owner house purchase lending totalled 10.7 billion in November, down 9% on October but up 18% onNovember 2014.
The latest data from the Council of Mortgage Lenders also shows that first time buyers borrowed 4.2 billion,down 9% on October but up 14% on November last year.
Home movers took out 32,300 loans, down 10% month on month and up 9% compared to November 2014. Intotal, this was 6.5 billion borrowed, down 10% on October but up 20% year on year.
Home-owner remortgage activity was down 9% by volume and 14% by value compared to October. Compared toNovember 2014, remortgage lending was up 24% by volume and up 36% by value.
Gross buy to let lending fell month on month, down 6% by volume and 8% by value, but the substantial growth year on year continued.
As expected, mortgage lending activity eased back as the normal dip in the winter months began, said PaulSmee, director general of the CML.
There was still growth across all lending types in November compared to the year earlier suggesting continuedimprovement. Our forecasts anticipate that gross lending will continue a slow but steady upward trajectory over the next two years, he added.
A breakdown of the figures shows that house purchase lending in the UK in November saw a decrease month onmonth by volume and by value of mortgages advanced, but compared to November 2014 volumes and amountborrowed overall increased.
As previously reported, UK gross lending overall in November totalled 20.5 billion, down 6% on October but upyear on year by 27% compared to November 2014. This was the highest lending level in the month of Novembersince 2007.
First time buyer lending declined by volume and by value compared to October, but saw a year on year increasein loan numbers and amount borrowed. Competitive mortgage rates mean first time buyers continue to pay lowlevels of their monthly household income to service the capital and interest rate payments of their mortgage at18.3% in November, joint lowest average percentage level since we began tracking this in 2005 alongside Juneand September 2015.
Home movers borrowed 6.5 billion in November, this was down compared to October but was the highestNovember level since 2007. Home movers spent 18.2% of their monthly gross household income to pay capitaland interest repayments, unchanged on October but a decrease compared to November 2014.
Remortgage activity saw a decrease by volume and by value in November compared to October, but increasedyear on year to have the highest volume of remortgage loans in the month of November since 2011 and the mostborrowed in the month of November since 2008.
Gross buy to let lending decreased in November compared to October but was substantially up on last year. Buy to let remortgage continues to be the driver of activity remaining consistent with October and considerable up on the year before, the CML report points out.
Patrick Bamford, director of Mortgage Insurance Europe for Genworth, said that while the competitive mortgagerates seen over the last year means that payments as a percentage of income remain at a record low for firsttime buyers, this is of little relief to the vast numbers of hopeful buyers who are unable save the amount requiredfor a deposit to take that first step onto the property ladder.
'First time buyer numbers were already on the wane in November, a concerning result when you consider thatthere are no shortage of government schemes to support first time buyers, with Starter Homes and the Help toBuy ISA in the process of launching,' he pointed out.
'The end of the Help to Buy mortgage guarantee is fast approaching and with little sign of Treasury appetite tocontinue this support, lenders will need to take steps to ensure that high loan to value (LTV) lending does not fallback into decline,' he added.
According to Peter Rollings, chief executive offier of Marsh & Parsons, overall the mortgage market hasprogressed an impressive distance over the past year. 'Bargain mortgage deals have transformed the borrowinglandscape in 2015. First time buyers, home movers and those seeking to remortgage have had it much easierthanks to a rock-bottom base rate,' he said.
'But nowhere was this upswing in lending more evident than in the buy to let sector. However, this hasnt goneunnoticed by the government and in the short term the April intervention on stamp duty will ensure that buy to letlending continues to be the one to watch over the next few months,' he explained.
'These opening months of a new year are typically the busiest for the housing market, as new buyers pile into themarket after the Christmas hiatus, added to those who had put their plans on hold at the end of the year, but arenow ready and motivated to progress up the property ladder. With supply of homes for sale still limited, buyersare having to act decisively, which should ensure a spritely pace of activity over the coming months,' he pointedout.
'Aspiring and existing landlords had added impetus to act quickly this spring and expand their portfolios beforebeing lumbered with an extra 3% stamp duty, and they may well be rewarded if they do. Already, 2016 is shapingup to be a strong year for lettings in London. January is usually the strongest month outside of the summer forlettings activity, and were seeing post Christmas divorces and the New Year mentality fuel new growth in theprime London rental market,' he added.