Please Note: This Article is 10 years old. This increases the likelihood that some or all of it's content is now outdated.

Although remortgaging remained unsurprisingly weak, lending for house purchase showed its first material annual growth in July for the first time since early 2007, according to the latest Council of Mortgage Lenders’ survey.

CML Press Release – 14 Sep 09

July house purchase lending up on a year ago for first time in over two yearsAt £14.5 billion, total gross lending rose significantly for the second month running, but was still 42% lower than in July last year. Within this, house purchase lending accounted for 56,000 loans totalling £7.5 billion – up from 47,000 loans totalling £7.1 billion in July last year.

Table 1: Loans for house purchase and remortgage

Number of
house purchase
loans
Value of house
purchase loans
£m
Number of
remortgage
loans
Value of
remortgage
loans £m
July 2009 56,000 7,500 41,000 4,700
Change from June 2009 +24% +27% +21% +12%
Change from July 2008 +19% +6% -53% -61%


The rise in house purchase lending in July was concentrated more heavily towards home movers than in June, when the largest rise was seen in first-time buyer activity. There were 20,400 first-time buyer loans and 35,700 home mover loans in July, up 18% and 28% respectively on June. But compared with a year earlier, the rise in first-time buyer numbers was higher, up 22% compared with a 17% rise in the number of movers.


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Table 2: First-time buyers, lending and affordability

Number of
loans
Value of
loans
£m
Average
loan to value
Average
income multiple
Proportion of
income spent on
interest payments
July 2009 20,400 2,300 75% 3.02 15.0%
Change from June 2009 +18% +21% 75% 3.08 14.9%
Change from July 2008 +22% +10% 86% 3.27 19.8%

Table 3: Home movers, lending and affordability

Number of
loans
Value of
loans
£m
Average
loan to value
Average
income multiple
Proportion of
income spent on
interest payments
July 2009 35,700 5,200 66% 2.70 11.1%
Change from June 2009 +28% +27% 69% 2.76 11.3%
Change from July 2008 +17% +4% 71% 2.91 17.0%

In terms of product choice, over three quarters of mortgages taken out in July were at fixed rates, with borrowers able to lock in to an average fixed rate of 4.7%, well below the average of 5.57% over the past decade.

Commenting on the latest survey data, CML economist Paul Samter observed:

It’s tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing. But there are still constraints affecting the lending industry’s capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being. The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”

1. The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.1 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML/Banksearch.

Please Note: This Article is 10 years old. This increases the likelihood that some or all of it's content is now outdated.

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