By value, there was £4.4 billion advanced to first time buyers in October, 10% up on September and 22% higher than October last year, the CML data also shows.
But first time buyer affordability changed fractionally, with first time buyers typically borrowing 3.39 times their gross income, compared to 3.4 in September. The typical loan size for first time buyers fell slightly month on month to £125,800 in October, down from £126,000 in September.
First time buyers in October paid 19.5% of gross income towards covering capital and interest payments, little changed from 19.6% in September but still significantly less than the recent peak of 24.8% in December 2007.
Lending to home movers also strengthened month on month. In October, the number of loans advanced to movers was 35,000, a 10% rise on the previous month and up 4% on October last year. By value, lending to movers totalled £6.5 billion, 8% up on September and up 10% on October last year.
Remortgage lending activity saw a decline month on month in October, with the number of remortgage loans totalling 26,600. This was 6% down on September and 11% down on October last year. The value of these loans at £4.1 billion was down 7% on the previous month and down 5% on October last year.
There were 19,600 buy to let loans in October, representing lending of £2.7 billion. This continued the growth seen last month with loan volumes and the value of these loans up 8% on September. Compared to October 2013, the number of loans increased 22% and the value of these loans went up 29%.
‘This has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy to let lending showing steady, consistent growth throughout 2014 compared to 2013,’ said Paul Smee, director general of the CML.
‘There have been fluctuations month to month but overall the market appears to be showing a positive direction of travel going into the New Year. Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts. The new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes,’ he added.
According to David Newnes, director of Your Move and Reeds Rains estate agents, while first time buyers have been forging ahead in the market this year, more recently lending to new buyers is starting to wane.
‘Mortgage market measures introduced in April have trimmed back lending since, coupled with the ongoing debate about when interest rates might rise and the LTI cap this has discouraged buyer demand. The recent stamp duty changes could be a shot in the arm, helping revitalise activity at the lower levels of the market and offering attractive savings enabling more buyers to enter the market more quickly,’ he said.
‘But in many parts of the country outside of London, the average price paid for a starter home is far shy of even the first stamp duty band. For these first time buyers, the tax changes are pie in the sky, and won’t have much impact on the ground. Here, where property is already more affordable, finding a large deposit is the hardest challenge,’ he explained.
‘So away from the south east corner of the UK, Help to Buy and higher LTV lending remain the vital tonics, helping new buyers swallow the upfront costs of climbing onto the property ladder, by making the deposit more manageable,’ he added.
Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), pointed out that 2014 has been a year of shoring up the foundations of the mortgage market. ‘So it is no mean feat to be approaching the home straight with gross lending of around £210 billion in sight. The market has weathered a considerable amount of upheaval this year without grinding to a halt,’ he said.
‘While there are issues to be ironed out, it is reassuring to see that lending activity has still grown and the recovery has maintained it’s upwards trajectory, albeit at a slower pace. The looming election and interest rate rise are both important factors that will impact the growth potential of the market in 2015,’ he explained.
‘One safe bet is that brokers will be kept busy as the balance of power and influence shifts in their direction. As we have already seen, they are involved in a growing number of mortgage transactions and are proving a vital ally for consumers following the Mortgage Market Review (MMR). People are increasingly motivated to look for expert guidance and advice on a far broader range of products than they can access direct from any one lender,’ he added.
Graham Davidson, managing director of Sequre Property Investment, believes that there seems to be a more general feeling that the property market has cooled slightly ‘It will be interesting to see if future reports continue to show these increases being maintained. I would expect to see these increases decreasing slightly in future reports,’ he said.
Pad Bamford, director of Mortgage Insurance Europe for Genworth, pointed out that the figures suggest that by the end of the year there will have been around 316,000 first time buyers in total, which would be the highest number since 2007.
‘Even so, it is still a modest achievement when you consider that on average, over 465,000 people bought their first home each year from 1980 up until the recession. Reports from e.surv that high loan to value (LTV) lending dipped in November are a sign that first time buyers are not out of the woods,’ he explained.
‘Industry efforts must continue to focus on promoting affordable ways to access home ownership so that it too is not consigned to the past,’ he concluded.
