The usual seasonal dip saw the total number of loans fall in January with home owner loans down 16% compared with December and first time buyer loans down 18%, but both have increased substantially in comparison to a year ago, up 30% and 38% respectively.
Remortgage lending in January was up 10% in volume compared to December and also up 16% compared to January 2013 and buy to let lending increased 11% in January in volume compared to December 2013. Buy to let remortgage lending also increased 6% compared to December.
‘January is always a subdued month in the mortgage market but the underlying trend and strong year on year growth across all borrower groups indicates a strong start to 2014 continuing the sort of lending levels seen throughout 2013,’ said Paul Smee, director general of the CML.
‘Lending to first time buyers and home movers has continued its upward trend and this, coupled with the growth in remortgage and buy to let activity, would suggest that all parts of the market are open for business,’ he added.
The full data shows that overall, 48,600 loans were advanced in January to home movers with a total in value of £8 billion and 21,800 to first time buyers with a total value of £3.1 billion.
The CML figures also reveal that over 95% of first time buyers opted for fixed rate mortgages in January and it said it appears that the introduction of the Help to Buy mortgage guarantee scheme has started to have an impact on first time buyer deposit requirements. The average loan to value for first time buyers was 82% in January, up from 80% seen in December 2013 and a year previous in January 2013.
Gross buy to let advances in January totalled 15,700 loans, which was up 8% compared to December 2013 and up 37% compared to January 2013. The value of these loans totalled £2.1 billion, an increase of 11% compared to December and up 40% compared to January 2013.
Similarly, buy to let loans for house purchase followed the same trend up 11% in January to 8,100 loans in total compared to December, and up 34% compared to January last year. The loans totalled £900m in value, which again was up 7% compared to December and up 32% compared to January 2013.
In parallel to this, buy to let remortgage lending increased in January to 7,500 loans, which was up 6% compared to December and up 42% compared to January 2013. These buy to let remortgages had a total value of £1.1 billion, up 10% compared to December and a year-on-year increase of 55% compared to January 2013.
David Newnes, director of Your Move and Reeds Rains owned by LSL Property Services, said that the growth among all borrower groups shows that the property market is thriving. ‘We are currently enjoying a prosperous and increasingly accessible mortgage market with approvals and gross lending hitting heights not seen since 2008,’ he pointed out.
‘Despite some seasonal dips, overall the number of first time buyer loans that have been advanced is up by over a third compared to a year ago, and the growth among all borrower groups shows that the property market is thriving. There have already been significantly more mortgage applications in the past year and a fall in fixed rates brings lower monthly mortgage payments. High LTV lending is up 74% compared to last January, which has brought on a revival in mortgage lending, fuelling a return to the market of the crucial first time buyers segment,’ he explained.
‘With increasing mortgage product availability and competition between lenders, home buyers with a deposit saved are currently enjoying the opportunities in the property market. Having said that, we are starting to see stocks of available property continue to reduce and the situation’s only set to get worse if new house building continues to fail to keep pace with the country’s needs. Overall the market is healthy, prices are inching up steadily, and at a sustainable rate,’ he pointed out.
He believes that the rise in the number of first time buyers entering the market due to more higher loan to value lending is key to future growth. ‘The Help to Buy scheme should continue to boost consumer demand in coming months, as confidence continues to grow. As more lenders enter the Help to buy scheme, buyers will hope for even better rates from new Help to Buy products. Improved availability of attractive mortgages will play into the hands of first time sellers, as well as first time buyers, and encourage significant movement at all property levels,’ he added.
