Despite an expected seasonal drop from December, the number of loans granted to first-time buyers and home movers increased 38 per cent and 30 per cent respectively in January.
According to figures from the Council of Mortgage Lenders, the number of loans advanced to homeowners for house purchase in January was down 16 per cent from December, but up 20 per cent on January 2013. Overall, 48,600 loans were advanced in January with a total in value of £8bn, which was a decrease of 14 per cent in value on December 2013 but a 43 per cent increase in comparison to January 2013.
The total number of loans advanced to first-time buyers (FTBs) in January totaled 21,800, down 18 per cent on December butup 38 per cent from January 2013. The total value of these loans was £3.1 billion, down 16 per cent on December 2013, but a year-on-year increase of 55 per cent in comparison to January 2013.
On average, the sum borrowed by FTBs was 3.39 times their income compared to 3.43 times in December.
The CML believes that the introduction of the Help to Buy mortgage guarantee scheme has started to have an impact on FTB deposit requirements. The average loan-to-value for first-time buyers was 82 per cent in January, up from 80 per cent seen in December 2013 and a year previous in January 2013.
In contrast to the month-on-month decrease in lending for home-owner house purchase, home-owner remortgage activity increased in January with a total of 28,000 remortgage loans advanced, up 10 per cent in volume compared to December and up 16 per cent compared to January 2013. These loans totaled £4.2bn in value, an increase of 11 per cent on December and up 31 per cent compared to January 2013.
Gross buy-to-let advances in January totaled 15,700 loans, which was up 8 per cent compared to December 2013 and up 37 per cent compared to January 2013. The value of these loans totalled £2.1bn, which was an increase of 11 per cent compared to December and up 40 per cent compared to January 2013.
Comment
Paul Smee, director general of the CML, commented: “January is always a subdued month in the mortgage market but the underlying trend and strong year-on-year growth across all borrower groups indicates a strong start to 2014 continuing the sort of lending levels seen throughout 2013. Lending to first-time buyers and home movers has continued its upward trend and this, coupled with the growth in remortgage and buy-to-let activity, would suggest that all parts of the market are open for business.”
Henry Woodcock, principle mortgage consultant, IRESS comments: “The mortgage market is in fine fettle at the moment. First-time buyers are taking advantage of very competitive rates on offer and the increasing choice of mortgage deals without colossal deposits while the prospect of house price appreciation is drawing demand from new buyers. Equally, buyers benefitted from the scramble from lenders to make use of cheap funds in the Funding for Lending before mortgage lending was no longer eligible for the scheme. As things stand, we expect that the flurry of activity will continue this month as brokers look to clear the decks ahead of the MMR coming into force in April.
“However, there are clouds on the horizon. The MMR’s implementation in April will undoubtedly cause some hiccoughs, while the Budget may see Help to Buy scaled back. If this is the case, the Chancellor must take care not to pull the rug from the housing market recovery too early, especially in regions that have not made the same strides as London and the South East.”
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