11th August 2015
House purchase lending enjoyed a significant month-on-month uptick in June, rising by 22% according to the Council of Mortgage Lenders (CML).
The rise was driven by both first-time buyers and home-movers.
However the trade body highlighted that 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.
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.
The CML noted that competitive mortgage rates meant 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.
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.”