11th November 2015
Buy-to-let lending saw the biggest increase of all mortgage types in September, with a 60% annual rise in landlords remortgaging.
First-time buyer lending was up 2% month-on-month and 10% year-on-year to £4.3bn in September, the figures from the Council of Mortgage Lenders show.
Competitive mortgage rates mean first-time buyers continue to pay a record low proportion of their monthly household income to service the capital and interest rate payments of their mortgage at 18.3% in September. This is the equal lowest monthly level, with June 2015, since the CML began tracking this metric in 2005.
Home mover lending saw a 4% dip to £6.8bn compared to August, but it was still 15% higher than a year ago.
Home-owner remortgage activity rebounded to £5.1bn in September after a dip in August, which was an increase of 19 per cent both year-on-year and month-on-month.
Buy-to-let saw year-on-year increases for both house purchases and remortgaging. Buy-to-let remortgage lending jumped by 11% month-to-month and 60% year-to-year at £2.1bn. Buy-to-let purchase lending rose by 7% compared to August and 36% compared to September last year to reach £1.5bn.
The figures for the third quarter as a whole show that first-time buyers lending increased in number of loans advanced and amount borrowed both in comparison to quarter two and the third quarter last year.
Home mover lending saw a similar trend to first-time buyers but the percentage increases by volume and by value were higher.
Home-owner remortgage activity saw an increase compared to the second quarter of the year, but a more substantial increase compared to the third quarter 2014.
Buy-to-let saw large quarter-on-quarter and year-on-year increases by number of loans and amount borrowed.
Paul Smee, director general of the CML, says:
“The market was a slow starter this year, but this quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the new year.
“Buy-to-let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first-time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy-to-let landlords in September, and the growth in buy-to-let lending largely continues to reflect its more belated recovery from recession.”
As previously reported, UK gross lending overall in September totalled £20.1bn, up 3% on August and 13% on September last year. This meant in the third quarter gross lending came to £61.4bn, up 18% on the previous quarter and a 12% rise on the third quarter 2014.
Overall in the third quarter, the value of home-owner loans for house purchase accounted for 57% of gross lending, while remortgage activity accounted for 24%. Buy-to-let as a proportion of total lending was around 18%.
By quarter, the third quarter also had the lowest percentage of monthly household income for mortgage capital and interest payments at 18.4%, equal with last quarter. This has decreased as a proportion year-on-year as in the third quarter of 2014 it was 19.6%.
Home movers spent 18.1% of their monthly gross household income to pay capital and interest repayments, unchanged from last month but a decrease compared to September 2014.
In the third quarter, home movers spent 18.1% as a proportion of their income to pay capital and interest repayments. This was slightly up from 18.0% in quarter two, but down compared to 18.8% in the third quarter of 2014.
Remortgage activity saw a rise by volume and by value in September compared to August and September last year. Third quarter remortgage activity also saw increases compared to the second quarter and the same period last year by volume and by value.
Buy-to-let currently represents 18% of gross lending.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), says: “After a slight lull in August, monthly mortgage lending picked back up in September. Lending is now at similar levels to those seen in June and July, which represented a post-recession high. Remortgage lending had a significant role to play in this growth, with both the volume and value of remortgage loans up substantially month-on-month. In contrast, the value of loans for house purchase saw a slight decline while the volume remained static.
“Some mortgage rates climbed in September*, triggering homeowners to lock into competitive rates before they miss out. While the Bank of England recently announced that the low interest rates could be in place for longer than expected, many homeowners still stand to save by moving to a more competitive deal, particularly those who are on their lender’s standard variable rate (SVR).
“Buy-to-let (BTL) lending also saw an upwards turn in September, as well as significant annual growth throughout the year. However, this form of lending is rising from a much lower base than the residential market, as availability of BTL mortgages was worst hit by the recent recession. BTL remortgages are slightly outpacing purchase loans in terms of growth, as landlords also see the benefits of moving to a more competitive deal.”