Home lending market in UK at consistent levels, latest CML data shows

Home lending trends have remained consistent in the UK with the latest figures showing numbers up by 27% in March month on month, but down 12% on the same time last year.

However, the Council of Mortgage Lenders pointed out that a comparison with last year is poor because there was a rush of buyers aimed at beating stamp duty changes in April 2016.

The CML data shows that home buyers borrowed £11.2 billion in March, up 24% on February but down 19% on March 2016. This came to 61,700 loans, up 27% on February but down 12% on March 2016.

First time buyers borrowed £4.9 billion, up 29% month on month and 9% higher than March 2016. They took out 31,500 loans, up 30% month on month and 12% year on year.

Home movers borrowed £6.2 billion, up 19% on February but down 33% year on year. This equated to 30,200 loans, up 24% month on month but down 28% compared to March 2016.

The data also shows that home owner remortgage activity was up 13% by value and 14% by volume on February. Compared to March 2016, remortgage lending was up 22% by value and 24% by volume.

Gross buy to let lending was up 4% by value and 8% by volume. Compared to March 2016, a month which had a surge of activity ahead of the stamp duty reform introduced in April 2016, as expected the number of loans decreased 58% and the amount borrowed decreased by 60%.

Quarter on quarter home buyers borrowed £28.6 billion, down 13% on the fourth quarter of 2016 and 7% on the first quarter 2016 while first time buyers borrowed £12.3 billion, down 13% on the fourth quarter 2016 but up 10% on the first quarter of 2016.

On a seasonally adjusted basis, first time buyer, home mover, buy to let and remortgage activity remained relatively unchanged by volume and by value month on month. Compared to March 2016, all loan types had similar changes to the non-seasonally adjusted figures.

‘Comparing this March to last year is misleading because of the peak in activity before the stamp duty changes last Spring. Overall, lending trends have remained reasonably consistent,’ said Paul Smee, director general of the CML.

‘The relatively sluggish activity among home movers stands in contrast to the growth in first time buyer and remortgage activity, but in aggregate the market is showing broadly the levels of activity we expected,’ he pointed out.

‘We expect a continuation of these trends, with both first time buyer and remortgage lending expected to maintain momentum in the light of the very attractive deals currently available,’ he added.

The data also shows that affordability metrics for first time buyers saw the typical loan size increase slightly from £132,200 in February to £133,500 in March. The average household income remained the same month on month at £40,000. This meant the income multiple went from 3.54 to 3.53.

The average amount borrowed by home movers in the UK decreased to £172,000 from £176,000 the previous month, while the average home mover household income decreased slightly month-on-month from £55,000 to £54,100. The income multiple for the average home mover was unchanged at 3.34.

Buy to let activity was driven by remortgage lending which accounted for nearly two thirds of total lending. The number of loans for buy to let house purchase advanced in March remained low compared to activity seen before the change on stamp duty on second properties introduced in April last year.