Lending to first-time buyers, home movers and remortgagers all increased in May, with a particularly marked increase in lending to first-time buyers, according to the latest Regulated Mortgage Survey data published by the Council of Mortgage Lenders.
House purchase and remortgaging
The £8.4 billion of lending for house purchase accounted for 57 per cent of all mortgage lending in May (by value), while remortgaging at £4 billion accounted for 27 per cent, and other lending (including lifetime, buy-to-let and further advances) at £2.3 billion accounted for 16 per cent.
First-time buyers
The number of mortgages to first-time buyers in May reached 25,100 – 29 per cent higher than in April, and 42 per cent higher than in May last year. First-time buyers accounted for 45 per cent of all loans for house purchase, similar to the levels of the past few months but considerably higher than the 38% seen on average since 2007.
The number of first-time buyer loans was the highest monthly figure since late 2007, and a marked contrast to the low point of just 8,500 loans in January 2009. By value, first-time buyer lending reached £3.4 billion in May, up from £2.5 billion in April and £2.2 billion in May last year.
For some months, there has been an increase in the number of first-time buyers entering the market with smaller deposits – this has now resulted in a shift in the average first-time buyer loan-to-value ratio rising to 83 per cent, up from 81 per cent in April and the highest ratio since November 2008. First-time buyers are also typically borrowing more (£113,400 in May, on average, compared with £110,000 in April and £105,000 in May last year), and typically now have higher incomes (£35,700 in May, up from £33,500 in May last year). The age of the typical first-time buyer remained at 29.
Home movers
The number of loans to home movers in May was up by 32 per cent on April, an increase similar to that among first-time buyers, but unlike the first-time buyer market the number of home-mover loans rose by a more modest 4 per cent compared with May last year. And, in contrast to the shift in first-time buyer loan profile, movers have experienced far less change in average loan size, income, or loan-to-value.
Paul Smee, director general of the Council of Mortgage Lenders, commented:
“Although monthly lending is still running at far less than half its typical monthly level during the peak, there is no doubt that the mortgage market is firmly open for business. Both the borrowing appetite of first-time buyers and the availability of attractive mortgages for them, have improved markedly since a year ago.
“What is interesting is that, in contrast to some recent assertions, this is happening in parallel with the strengthening buy-to-let market. It is perfectly possible for both the buy-to-let market and the first-time buyer market to improve at the same time, as the evidence clearly demonstrates.
“It is important that the supply of housing steps up, as increased housing supply is a crucial factor in ensuring that housing is affordable over the long term.”
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