New CML data released today on the profile of lending in September and the third quarter of 2013 show:
- Total home-owner house purchase lending fell in September, down 14% on August but up year-on-year by 20%. Lending in the third quarter of 2013 was at its highest quarterly level since 2007.
- First-time buyers took out 23,600 loans in September, a 34% increase compared to September 2012. Third quarter results saw first-time buyer lending up 16% on the second quarter of 2013 and 34% up on Q3 2012.
- Home movers lending decreased by 16% in volume compared to August but was up 18% compared to last year. Third quarter lending for home movers was up 21% on the second quarter.
- Home-owner remortgage lending showed strong growth in September, up 20% compared to August and up 11% in the third quarter compared to the second quarter of 2013.
- Total buy-to-let loans advanced increased slightly to 14,600 loans in September, up 0.7% compared to August. Buy-to-let overall in quarter three of 2013 grew compared to the second quarter and the same period last year.
As previously reported, gross UK mortgage lending was £16.2bn in September, a slight decrease compared to August when it was £16.4bn but up 41% compared to September last year. Gross lending for the third quarter of 2013 was £49.3 billion. This represents a 17.6% increase on the second quarter of 2013 and a 32% increase on the third quarter of last year.
Lending for home-owner house purchase
Lending for home-owner house purchase declined slightly in September due to the seasonal dip consistently seen in the yearly lending cycle to 52,800 loans, down by 14% on August, but the underlying growth continued with an increase of 21% on September last year. The value of these loans totalled £8.4bn, down £13% on August but up 27% on September last year.
Overall in the third quarter of 2013, there were 170,700 house purchase loans advanced, worth a total of £27.1bn, which is the highest quarterly figure since the fourth quarter of 2007.
Chart 1: Loans for home-owner house purchase per quarter
Source: CML
Table 1: Loans for home-owner house purchase and remortgage
| Number of house purchase loans |
Value of house purchase loans, £m |
Number of remortgage loans |
Value of remortgage loans, £m |
|
| September 2013 |
52,800 | 8.400 | 32,900 | 4.700 |
| Change from August 2013 |
-13.7% | -13.4% | 20.1% | 23.7% |
| Change from September 2012 |
20.5% | 27.3% | 36.0% | 46.9% |
Lending to first-time buyers
Lending to first-time buyers totalled 23,600 loans in September, a decrease of 12% in volume compared to August but up 34% compared to September 2012.
These loans totalled £3.3bn in value which was a decrease of 11% compared to August but a 50% increase by value on September last year.
Overall in the third quarter of 2013, 74,800 loans were advanced to first-time buyers, which had a value of £10.4bn. This was an increase of 16% from 64,500 loans in the second quarter of 2013 and an increase of 34% from 56,000 loans in the same period in 2012.
The typical first-time buyer income multiple continued an upward trend with first-time buyers typically borrowing 3.39 times their gross income. Despite this, the continued downward drift in mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.2% of gross income to cover capital and interest payments, slightly above the 19.1% lowest figure since 2005.
Chart 2: First-time buyers lending per quarter 
Source: CML
Table 2: First-time buyers, lending and affordability
| Number of loans | Value of loans £m | Average loan to value | Average income multiple | Proportion of income spent on interest payments | Proportion of income spent on capital and interest payments | |
| September 2013 |
23,600 | 3,300 | 80% | 3.39 | 11.5% | 19.2% |
| Change from August 2013 |
-11.6% | -10.8% | 81% | 3.37 | 11.7% | 19.3% |
| Change from September 2012 |
34.1% | 50.0% | 80% | 3.26 | 13.7% | 20.0% |
Lending to home movers
Loans advanced to home movers totalled 29,100 in September, which was down in volume 16% compared to August but up by 11% compared to September last year. Home mover loans totalled £5.2bn in value in September, which was down 13% on August but up 18% compared to last year.
Overall for the third quarter of 2013, loans advanced to home movers totalled 95,700, worth £16.8bn. This was an increase of 21% in volume, and 28% in value, compared to the second quarter of 2013. This was also 9% higher in numbers compared to the third quarter last year and 13% up in value.
Chart 3: Home movers lending per quarter
Source: CML
Table 3: Home movers, lending and affordability
| Number of loans | Value of loans £m | Average loan to value | Average income multiple | Proportion of income spent on interest payments | Proportion of income spent on capital and interest payments | |
| September 2013 |
29,100 | 5,200 | 70% | 2.97 | 8.8% | 18.3% |
| Change from August 2013 |
-15.7% | -13.3% | 70% | 2.93 | 8.7% | 18.2% |
| Change from September 2012 |
11.1% | 18.2% | 69% | 2.90 | 10.4% | 19.5% |
Lending to home owners for remortgage
Home-owner remortgage showed strong growth in September with a total of 32,900 remortgage loans advanced in the period, up 20% compared to August and 36% on September last year. This totalled £4.7bn in value, an increase of 24% on August and 47% in value compared to September 2012.
Remortgaging in the third quarter of 2013 grew by 11% to 90,400 loans advanced from the second quarter of 2013 and up from 72,000 loans in quarter three of 2012.
Chart 4: Remortgage lending per quarter
Source: CML
Lending for buy-to-let
Lending for buy-to-let increased marginally in September with 14,600 buy-to-let loans advanced, which was up 0.7% in volume compared to August. The value of these loans totalled £1.9bn, which was unchanged from August.
Overall buy-to-let lending in the third quarter of 2013 grew with 43,900 loans advanced in this quarter which was up 16% on the second quarter of 2012 and 36% compared to last year. These loans were worth £5.7bn which was up 19% on the previous quarter and 43% up compared to the same period last year.
The growth in buy-to-let in the third quarter of 2013 was driven by both buy-to-let house purchase and buy-to-let remortgage. Buy-to-let house purchase lending increased in the third quarter to 22,790 loans advanced compared to 19,410 in the second quarter of 2013. This was also a 29% increase on the third quarter of 2012.
Buy-to-let remortgage lending also increased in the third quarter, up 15% on the second quarter of 2013 and up 42% on the third quarter of 2012. The value of these loans also increased in September to £2.9bn, up 19% on the second quarter of 2013 and up 53% in value compared to the third quarter of 2012.
Chart 5: Buy-to-let lending for house purchase and remortgage per quarter
Source: CML
Table 4: Loans for buy-to-let house purchase and remortgage
| Number of Gross BTL advances in period | Value of Gross BTL advances, £m | Number of BTL house purchaseloans | Value of BTL house purchase loans, £m | Number of BTL remortgage loans |
Value of BTL remortgage loans, £m |
|
| September 2013 |
14,600 | 1,900 | 7,640 | 870 | 6,850 | 990 |
| Change from August 2013 |
0.7% | 0.0% | -0.5% | 0.0% | 1.6% | 3.1% |
Source: CML
Paul Smee, director general of the CML, commented:
“The typical seasonal fall in lending in September was expected but we are seeing appreciable year-on-year and quarterly lending rises that suggests the market is continuing its recovery.
“First-time buyers were a key driver in the first half of 2013 but now home movers and remortgages are showing renewed strength which puts the market in a good position to continue momentum into the final few months of 2013 and the new year.”
Karen Bennett, Sales and Marketing Director, Commercial Mortgages, Shawbrook Bank, had this to say about the increase:
“The on-going buoyancy of the buy-to-let market is good news for the UK property market in general and combined with the Bank of England’s decision to keep interest rates frozen, it’s a good time to invest in property. To a certain extent the buy-to-let market has been the driving force behind the revival of the property market in the UK. However, now is the time to be careful and not get carried away by market optimism. There needs to be caution on both sides as the current unusual conditions can’t last.
Lenders need to be responsible about the funding they provide based on rental income as well as the experience of the investors they fund. Equally, there is a lot of excitement among investors, but they should keep a close eye on their portfolios to make sure that once the inevitable happens and interest rates rise, their properties generate enough rent to cover the mortgages.”
Lucy Hodge, Director of Vantage Finance said,
“Today’s figures certainly reflect what we have been seeing in the market. Demand for BTL products is growing, thanks to a buoyant rental market that shows no signs of slowing. It’s a long time since there have been enough BTL products to satisfy the needs of property investors, and at the moment any new products are snapped up really quickly.
“Funding solutions beyond the high street are proving particularly popular. As a result of restricted criteria and fairly restrictive maximum exposure limits from mainstream lenders on the number of loans, or volume of lending to an individual, many have sought out more comprehensive solutions from commercial lenders, or those more geared toward professional landlords where there is scope for larger portfolios.
“There are still significant opportunities for lenders to fulfil demand in the BTL market and it would be exciting to see more creative solutions from lenders. Nevertheless, the increase in lending announced today is a positive reflection of the market’s current strength.”