Mortgage lending in the UK is continuing to improve as 2013 progresses with the most recent report finding a 12 per cent month-on-month increase in mortgage lending in July, representing a 29 per cent increase on the same month last year.
The report from the Council of Mortgage Lenders found that first-time buyers took out 25,300 loans in July, an increase of 5 per cent on June and up 41 per cent on July 2012. However, this was exceeded by home-movers, with 32,000 loans advanced , up 12 per cent on June and 9 per cent on last year.
The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2 per cent to 18.3 per cent in July. However, this was a decrease in comparison to July 2012 when it was 19.3 per cent.
Lending to home owners for remortgage
Lending to home-owners for remortgage increased by 9 per cent in July compared to June but still remains subdued compared to historical volumes. In total, £3.8bn was advanced in July to home-owners for remortgages which represented a 9 per cent increase in value on June and a 15 per cent increase on July last year.
Remortgage activity reported by CML is likely to increase in the coming months – Bank of England approvals data showed a 40 per cent increase in July.
Lending for buy-to-let
Lending for buy-to-let has continued to follow an upward trend, similar to the market overall. 15,200 buy-to-let loans were advanced in July, an increase of 12 per cent compared to June. This represents a value of £2bn which was 11 per cent higher than in June.
Paul Smee, director general of the CML, commented: “The notable feature is the catch-up in home mover activity; for only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing.”
David Whittaker, managing director of Mortgages for Business, commented: “First-time buyers are the bedrock of a strong and balanced housing market, so their return is a welcome sign. Rates are at record lows, criteria have eased and there is a wider choice of house purchase mortgages, which is fuelling a rapid improvement in the owner-occupier market. Lenders are now more accommodating to high LTV borrowers, which has opened the door to thousands of buyers who were shut out of the market prior to this year. But first-time buyer levels are still low by historic standards, which is keeping demand high in the rental sector and returns high for landlords.”
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