New Council of Mortgage Lenders (CML) data on the characteristics of
lending in Northern Ireland in the second quarter of 2015 outlining
mortgage lending to first-time buyers, home movers and remortagors.
Lending in the second quarter 2015:
• House purchase activity bounced back from the usual seasonal dip at the beginning of the year, but saw a decline compared to the second quarter in 2014.
• First-time buyers and home movers saw similar trends with both increasing quarter-on-quarter but falling compared to the same period in 2014.
• Remortgage activity increased compared to the first quarter and on the same quarter last year.
Paul Smee, director general of the CML, commented:
“Remortgage lending has shown growth for the third quarter in a row, a marked difference to its rather subdued levels over the past few years, and is now at it's highest since mid-2011 in Northern Ireland. With a potential interest rate rise becoming more likely, it appears people are looking to secure competitively-priced mortgage deals.
“House purchase lending has increased compared to the first quarter which is unsurprising given the traditional lull in lending during the winter months. There was a decline year-on-year, but this is still the second best performing second quarter in Northern Ireland since 2007 and we have forecast activity to continue to pick up going forward.”
Lending for house purchase and remortgage
House purchase lending in Northern Ireland saw a quarter-on-quarter rise, in both number of loans and amount borrowed. In comparison to the second quarter of 2014, however, there was a dip in activity but this still the second highest lending level in a second quarter of the year since 2007.
First-time buyers continue to drive the market accounting for 57% of house purchase activity.
Remortgage lending went up a third year-on-year by the amount borrowed and increases in number of loans mean that quarterly remortgage activity is the highest since 2011 in Northern Ireland.
Lending to first-time buyers
First-time buyers in Northern Ireland typically borrowed 2.79 times their gross income, up from 2.70 the previous quarter but less than the UK average of 3.38.
The typical loan size for first-time buyers was £81,275 in the second quarter, up from £78,300 in the first quarter. The typical gross income of a first-time buyer household was £30,000, up compared to £29,352 in the first quarter.
The relatively low level of interest rates saw first-time buyers' payment burden remaining relatively low in the second quarter at 16.2% of gross income being spent to cover capital and interest payments, lower than the first quarter's 17.0% and the 18.4% UK average.
Lending to home movers
Home movers in Northern Ireland typically borrowed 2.32 times their gross income, up from 2.29 the previous quarter but less than the same quarter last year and the UK average of 3.08.
The typical loan size for home movers was £104,295 in the second quarter, unchanged from the previous quarter, but substantially lower than the £160,994 UK average. The typical gross income of a home movers' household was £46,076, up compared to £45,091 in the first quarter.
Home movers' payment burden in the second quarter saw them spend 15.1% of their gross household income to cover capital and interest payments, a slight change from 15% in the first quarter, but substantially lower than the 18% UK average.
(Source - CML Press Release)