The latest figures from the Council of Mortgage lenders also show that first time buyers took out 23,600 loans in September, a 34% increase compared to September 2012. Third quarter results saw first time buyer lending up 16% on the second quarter of 2013 and 34% compared with the same quarter in 2012.
Home movers lending decreased by 16% in volume compared to August but was up 18% compared to last year and third quarter lending for home movers was up 21% on the second quarter.
Home owner remortgage lending showed strong growth in September, up 20% compared to August and up 11% in the third quarter compared to the second quarter of 2013.
Total buy to let loans advanced increased slightly to 14,600 loans in September, up 0.7% compared to August. Buy to let overall in quarter three of 2013 grew compared to the second quarter and the same period last year.
The CML said that lending for home owner house purchase declined slightly in September due to the seasonal dip consistently seen in the yearly lending cycle to 52,800 loans, down by 14% on August, but the underlying growth continued with an increase of 21% on September last year. The value of these loans totalled £8.4 billion, down £13% on August but up 27% on September last year.
Overall in the third quarter of 2013, there were 170,700 house purchase loans advanced, worth a total of £27.1 billion, the highest quarterly figure since the fourth quarter of 2007.
Lending to first time buyers totalled 23,600 loans in September, a decrease of 12% in volume compared to August but up 34% compared to September 2012. These loans totalled £3.3 billion in value which was a decrease of 11% compared to August but a 50% increase by value on September last year.
Overall in the third quarter of 2013, 74,800 loans were advanced to first time buyers, which had a value of £10.4 billion, an increase of 16% from 64,500 loans in the second quarter of 2013 and an increase of 34% from 56,000 loans in the same period in 2012.
The data also shows that typical first time buyer income multiple continued an upward trend with first time buyers typically borrowing 3.39 times their gross income. Despite this, the continued downward drift in mortgage interest rates have kept borrowers' payment burden low.
Loans advanced to home movers totalled 29,100 in September, which was down in volume 16% compared to August but up by 11% compared to September last year. Home mover loans totalled £5.2 billion in value in September, which was down 13% on August but up 18% compared to last year.
Overall for the third quarter of 2013, loans advanced to home movers totalled 95,700, worth £16.8 billion. This was an increase of 21% in volume, and 28% in value, compared to the second quarter of 2013. This was also 9% higher in numbers compared to the third quarter last year and 13% up in value.
Home owner remortgage showed strong growth in September with a total of 32,900 remortgage loans advanced in the period, up 20% compared to August and 36% on September last year. This totalled £4.7 billion in value, an increase of 24% on August and 47% in value compared to September 2012.
Remortgaging in the third quarter of 2013 grew by 11% to 90,400 loans advanced from the second quarter of 2013 and up from 72,000 loans in quarter three of 2012.
Commentators in the industry have welcomed the steady improvement in lending levels. ‘By almost any measure you use, it’s clear that lending levels improved drastically in the last few months. The mortgage industry has found a way to sustainably and significantly boost activity in the property market,’ said Paul Hunt, managing director of Phoebus Software.
‘There are many new signs of life: house purchase lending is up by a fifth compared to a year ago and first time buyer activity has jumped significantly. Lenders have been proactive in their approach to lending and their innovative steps to improve mortgage availability have heated up the mortgage market,’ he explained.
‘Some of the roadblocks are being knocked off the pathway for prospective buyers, and the number of mortgage deals on the market has increased rapidly. As the Help to Buy scheme gains momentum it should kick start the housing market from the bottom tier. Without doubt, the mortgage market is taking steps towards fertile grounds,’ he added.
Brian Murphy, head of lending at the Mortgage Advice Bureau, said that even although lending stalled slightly in September, looking at the bigger picture, this fall is no more than a momentary blip, as year on year figures reveal a rise of 20% in mortgage lending.
‘Consumers have a cornucopia of mortgage products to choose from. This, as well as historically low mortgage rates, with all fixed rate products under 4%, has helped to tempt many onto the housing ladder,’ he pointed out.
He believes that with the second phase of Help to Buy having been brought forward this, along with the traditional New Year rush, is likely to invigorate the mortgage market further. He also pointed out that with demand increasing the construction industry needs to meet the increasing demand or prices may rise too much and too fast.
David Brown, commercial director of LSL Property Services, said that the housing market feels solid now and volumes are growing steadily. 'Confidence will be important, because there’s still some way to go, particularly for first time buyers. The struggle to buy a first home is no longer an insurmountable wall but certainly still an obstacle course,' he explained.
'Prices are rising around 2% faster for first time buyers than they are for established home owners. And while new buyer lending has made a significant recovery, stronger than mortgages as a whole, loans to first timers are recovering from an even lower base. Across the board, mortgage approvals are still around 40% lower compared to pre-crash levels so there’s certainly still room for growth and improvement,' he pointed out.
'In the meantime, as potential homeowners battle to build even a 5% deposit they now have a helping hand in the form of lower inflation, a cautious recovery in the jobs market and an expanding supply of homes to rent, he added.
