The latest data from the CML shows that the total number of loans advanced to home owners for house purchase remained practically unchanged in February compared to January but increased 33% compared to February 2013.
First time buyers took out 22,200 loans in total in February, a modest rise in volume compared to January but up 41% compared to February 2013. While home movers took out a total of 26,200 loans for house purchase in February, down 2.2% compared to January but up 27% compared to February last year.
The total number of loans taken out by home owners for remortgage fell in February by 15% compared to January but still had a strong year on year increase, up by 17% compared to February 2013.
Gross buy to let loans advanced decreased in February to 14,300 compared to 15,700 in January but there was a strong year on year increase in volume of 46% compared to February 2013.
Despite the predicted seasonal dip around this time of year, lending for home owner house purchase in February remained steady. The total number of loans advanced to home-owners for house purchase was 48,400 loans, only a slight difference to the 48,500 loans in January, but an increase in volume of 33% compared to February last year.
Overall, the value of the loans advanced in February totalled £7.8 billion, which was only slightly lower than £7.9 billion in January but a substantial increase of 47% compared to February 2013.
The total number of loans advanced to first time buyers in February totalled 22,200, a slight increase of 2.3% in volume compared to January and up 41% compared to February 2013. These loans totalled £3.1 billion in value which was exactly the same as the January figure but an increase of 55% compared to February 2013.
The typical first time buyer income multiple increased slightly, with first time buyers typically borrowing 3.4 times their gross income, compared to 3.39 in January. The typical loan size for first time buyers was £119,000 in February, which was a decrease from £119,735 in January. In parallel to this, the typical income of a first time buyer household fell slightly to £35,297, which was down from £36,408 in January.
Low mortgage interest rates have kept borrowers' payment burden low. First time buyers spent 19.2% of gross income to cover capital and interest payments, lower than the 19.3% in January and only slightly higher than the recent lowest level of 19.1 recorded in April 2012, April 2013 and November 2013.
The number of loans advanced to home movers for house purchase totalled 26,200 in February, down 2.2% in volume compared to January but up by 27% compared to February 2013. Home mover loans totalled £4.7 billion in value in February, which was a month on month decrease of 4% from January but up 38% compared to February 2013.
Home owner remortgage activity showed the biggest seasonal dip of all the lending types decreasing in February to 23,800 loans, down in volume 15% compared to January but up from February 2013 by 17%. These loans totalled £3.5 billion in value, which was down 17% on January but up 30% compared to February 2013.
Buy to let lending was also affected by seasonal factors in February with gross buy to let lending totalling 14,300 loans advanced, which was down 9% compared to January but up 39% compared to February 2013. The value of these loans totalled £1.9 billion, which was again a decrease compared to January down 10% but up 46% compared to February 2013.
Similarly, buy to let lending for house purchases decreased to 7,500 loans advanced, down 7% compared to January but up 37% compared to February 2013. The loans totalled £900 million in February, which was unchanged from January but up 58% compared to the same month last year.
Buy to let remortgage lending also decreased month on month to 6,600 loans, down 12% in volume compared to January but up 41% compared to February 2013. These buy to let remortgages had a total value of £1 billion, down 9% compared to the previous month but up 64% compared to February 2013.
‘We would expect a seasonal lending dip around this time of year. However, lending to both first time buyers and home movers bucks this trend, continuing to show momentum. The substantial year on year growth shows how far the market has moved since the flat period experienced up until around a year ago,’ said Paul Smee, director general of the CML.
‘The new regulation of mortgages that takes effect at the end of April is a significant change. The industry is ready for the transition, although there is clearly potential for lending to be distorted temporarily over the coming months, given the magnitude of the changes and the importance of complying with regulatory expectations. Overall, we expect to see continuing growth in mortgage borrowing ahead, within responsible lending parameters, as the pent up demand of the recession years finds an outlet in a stronger market,’ he added.
David Brown, commercial director of LSL Property Services, said it is good news that year on year lending numbers are up, but he pointed out that beyond seasonal factors, the whole property industry is hoping to overcome bigger issues this year.
‘The imminent Mortgage Market Review presents fresh challenges that need to be overcome because we all need a sustainable mortgage market. Affordability is as much an issue for the industry at large as for those struggling to get on the bottom of the property ladder,’ he explained.
‘And building enough homes to keep up with this renewed demand will be just as much a test in 2014. Things are already getting better as the construction industry is breaking out of a long hiatus and new homes hit the market,’ he said.
‘But for the time being the private renting is an excellent option for many households with rents set to peak as a proportion of wages this year. More buy to let finance is good news and critical to maintain that momentum,’ he added.
