Lending for home purchases in Wales increased in third quarter 2012

The number of loans for house purchases in Wales increased in the third quarter showing a similar trend to the UK as a whole, according to new figures released today (Monday 26 November) by the Council of Mortgage Lenders in Wales.

There were 5,900 house purchase loans advanced in Wales in the third quarter, up by 5% on the second quarter, but 5% lower compared to the same period last year.

By value, house purchase loans in the third quarter were worth £650 million, an increase of 8% on the previous quarter but down by 3% compared to the third quarter of 2011.

Lending to borrowers buying a home in Wales grew slower than in the UK, where there was an increase of 16% compared to the second quarter.

Similar to the UK, remortgage lending fell in the third quarter. A total of £300 million was advanced to borrowers remortgaging, down by 14% compared to the second quarter and by 32% compared to the third quarter last year. This represented a larger fall than in the UK overall where remortgage lending fell by 7% compared to the previous quarter and 24% compared to the third quarter last year.

Contributing to the increase in house purchase loans, the number of loans advanced to first time buyers rose in the third quarter. In the last three months, 2,300 first time buyers in Wales bought their first home. This represented a 10% increase compared to the second quarter, but unchanged from the same period last year.

Lending to first time buyers in Wales totalled £220 million in the third quarter, up from £200 million in the previous quarter.

On average, first time buyers in Wales continued to put down a smaller deposit than in the UK overall. In the third quarter, the loan to value (LTV) ratio remained unchanged compared to the first two quarters of 2012, at 85%. This compared favourably with the rest of the UK where first time buyers typically borrowed 80% of the properties value.
Initial mortgage payments consumed 19.1% of first time buyer income in the third quarter in Wales, unchanged compared to the second quarter and lower than the 20.1% in the UK overall.
 
Home movers in the third quarter accounted for a small increase compared to the previous quarter. A total of 3,600 loans were advanced to home movers, up by 3% compared to the second quarter, but down by 5% on the same period last year. By value, £430 million was advanced to home movers, compared to £410 million in the second quarter and £460 million in the third quarter last year.

The LTV ratio for home movers in Wales, at 71%, remained unchanged for the fourth consecutive quarter.

‘With the number of house purchase loans increasing and remortgage lending fading, the market in Wales has shown similar trends to the UK overall,’ said Peter Hughes, chair of CML Cymru.

‘The launch of a mortgage indemnity scheme earlier this month should help people to access higher loan to value mortgages from spring next year, but as with the Funding for Lending scheme, it will take some time before we can assess the full impact,’ he added.