Lending in June:
• First-time buyers saw a large
month-on-month increase in activity compared to May, but little change
when compared to June 2014.
• Home mover lending also saw substantial monthly increases and slight yearly increases in volume and value.
• Home-owner remortgage activity increased by over a third month-on-month and year-on-year.
• Buy-to-let continues to grow year-on-year and month-on-month, mainly driven by buy-to-let remortgage activity.
Lending in the second quarter 2015:
• Coming out of the first quarter seasonal dip, First-time buyers increased in number and amount advanced by over 20% but there was a year-on-year decline in lending when compared to the same quarter in 2014.
• Home mover lending saw similar quarter-on-quarter increase but year-on-year decline.
• Home-owner remortgage activity rebounded to higher volume and value compared to the first quarter of the year and the second quarter of 2014.
• Buy-to-let has increased compared to the second quarter last year in both volume and value. This was mainly driven by remortgage activity.
Paul Smee, director general of the CML, commented:
“Notable this month is the uptick in remortgage activity among home-owners, perhaps reflecting an increased desire to lock into competitively-priced mortgage deals in advance of any rise in rates. It is likely that people are now beginning to feel a rate rise is a realistic prospect, and not just a distant theoretical possibility.
“After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecasts.”
House purchase lending in the UK in June saw a substantial month-on-month increase in activity with over 20% more loans being advanced to purchase a house compared to May. However, the number of loans and value for home-owner house purchase remained relatively steady compared to June last year, with the number of loans decreasing slightly but the amount borrowed increasing. There was a relatively similar trend in activity for home-owner house purchase in the second quarter overall.
The rise in the number of loans for house purchase in June was driven by both first-time buyers and home-movers. The increase in the two areas was broadly the same in value and volume terms.
As previously reported, gross lending in June totalled £20.1bn, up 25% on May and 13% up on June last year. This meant in the second quarter, gross lending came to £52.2bn, up 17% on the previous quarter and a 2% rise on the second quarter 2014.
Overall in June, the value of home-owner loans for house purchase accounted for 54% of gross lending, while remortgage activity accounted for 25%. Buy-to-let as a proportion of total lending remained at around 17% but still makes up a larger portion of total lending compared to the same time last year.
Competitive mortgage rates mean first-time buyers are paying a record low proportion of their monthly household income in June to service the capital and interest rate payments of their mortgage. This is the lowest level since the CML began tracking it in 2005.
Home movers spent 17.9% of their monthly gross household income to pay capital and interest repayments, down on last month and the same period last year. Like first-time buyers, this is the lowest it has been since the CML began tracking this data in 2005.
Remortgage activity showed a sudden sharp rise in activity in June, after a muted beginning of the year, rising in both volume and value by over a third compared to both the previous month and June last year. Second quarter remortgage activity also saw increases compared to the first quarter and the same period last year although the rise was not as sharp.
Lending for buy-to-let
Buy-to-let lending for house purchase has performed more strongly than the home-owner loans for house purchase for most of the year, which in part is due to buy-to-let lending declining more than home-owner loans during the downturn. It currently accounts for 17% of gross lending in June.
Overall, buy-to-let lending rose sharply in June, increasing both month-on-month and year-on-year. While buy-to-let house purchase rose significantly, these increases are driven more by strong buy-to-let remortgage activity. A similar trend was seen in the second quarter as a whole, although the increases in volume and value were more muted.
(Source - CML Press Release)