Mortgage market growth expected to continue into 2014, says latest CML report

The total number of loans advanced to home owners in the UK or house purchase fell slightly in November, down in volume by 3% compared to October but still the fourth highest monthly level since December 2007, according to the latest data from the Council of Mortgage Lenders. 

First time buyers took out 27,000 loans in November, a modest rise in volume of 0.7% compared to October but up 24% compared to November 2012 while the number of loans advanced to home movers declined slightly in November, down 2.4% compared to October.
 
The number of loans advanced to home owner remortgagors also fell in November, down by 3% compared to October but up 4% on November 2012 but the number of buy to let loans taken out in November was 16,200, the same volume as October.

The data also shows that the total number of loans advanced to home owners for house purchases decreased in November, down 1% compared to October but up 15% on November 2012. Overall, 60,000 loans were advanced in November with a total in value of £9.4 billion, which was a decrease of 2% by value on October but a 22% year on year monthly increase. This is the fourth highest monthly lending amount for home owner house purchase since December 2007.
  
First time buyer loans totalled £3.7 billion in value which was exactly the same as October figures but an increase of 37% compared to November 2012. The typical first time buyer income multiple declined slightly, with first time buyers typically borrowing 3.35 times their gross income, compared to 3.36 in October.

The typical loan size for first time buyers was £116,913 in November, again a decrease from £119,500 in October. In parallel to this, the typical income of a first time buyer household fell slightly to £35,848, which was down 1.7% from £36,465 in October.

The CML says that the continued downward drift in mortgage interest rates have kept borrowers' payment burden low. First time buyers spent 19.1% of gross income to cover capital and interest payments, lower than the 19.3% in October and on par with the lowest recorded monthly figure since 2005 recorded in April 2012 and April 2013.
 
Home mover loans totalled £5.7 billion in value in November, which was down from £5.9 billon in October but up from £4.9 billion in November 2012. Home owner remortgage loans totalled £4.1 billion in value, a slight decrease of 2% on October but up 21% compared to November 2012.

Meanwhile, buy to let lending in November totalled 16,200 loans advanced, which was unchanged on October. The value of these loans totalled £2.1 billion, which was also unchanged from October. Buy to let loans totalled £1 billion in value, the same as in October and buy to let remortgage lending had a total value of £1.1 billion, the same as in October.

‘The Bank of England's credit survey reported demand in the final quarter of 2013 for house purchases was rising at its fastest pace since the survey began in 2007. This is a significant shift in public mood and, with strong November lending continuing the year on year growth seen since April 2013, this should be expected to continue in 2014,’ said Paul Smee, director general of the CML.

Paul Hunt, managing director of Phoebus Software, believes that confidence is growing and there are positive signs ahead for 2014 as indicators of loan affordability remain strong. ‘There’s been a large jump in first time buyer activity, and the strong year on year growth in lending shows steady progress is being made towards recovery,’ he said.

‘Demand for house purchases towards the end of 2013 was rising at its fastest pace in years and it’s clear momentum is building across the board. Over the past 12 months, banks have brought down mortgage rates while at the same time boosting home lending,’ he pointed out. ‘The mortgage market has become more accessible for a wave of new buyers which has resulted in a substantial pick up in sales. The government's Help To Buy scheme has given the mortgage market a burst of colour, and will continue to play a more pivotal role this year,’ he added.