House Lending is Soaring Upwards

House Lending is Soaring Upwards

"In 2013, there has been a resurgence in the mortgage market with year-on-year growth for all types of borrower. First-time buyers were an especially important factor in driving the market forward in 2013 as improved economic conditions, as well as the introduction of government schemes like Help to Buy, have given the opportunity for them to enter the market and become home-owners." Paul Smee, CML Director General.

  • Loans advanced to first time buyers in Dec 2013 was 26,700 up 1% from Nov 213 and an increase of 37% from Dec 2012.
  • Overall for 2013 first time buyers were advanced 268,800 in loans for house purchase, a 23% increase to 2012.
  • As seen throughout 2013, lending to first-time buyers continued to be a key driver in the closing quarter of 2013 with a year-on-year increase in volume of 30% on the fourth quarter of 2012. This resulted in lending to first-time buyers for 2013 being up in volume by 23% on 2012.  

The typical first-time buyer income multiple increased, with first-time buyers typically borrowing 3.43 times their gross income in December 2013, compared to 3.38 in November 2013. The continued downward trend in mortgage interest rates has kept borrowers’ payment burden low. First-time buyers in December spent 19% of gross income to cover capital and interest payments, slightly higher than the 19.1% in November 2013 but down from 20% in December 2012. In addition, over 95% of first-time buyers opted for fixed rate mortgages in December.

Overall for 2013, first-time buyers were advanced 268,800 loans for house purchase, an increase of 23% compared to 2012. The total value of these loans came to £36.1bn, up 31% compared to 2012.

In 2013 there was a resurgence in the mortgage market with a year on year growth for all types of borrower,

Overall for 2013, loans to home movers for house purchase totalled 336,200, an increase of 3% on 2012. The total value of these loans was £57.6bn, up 7% compared to 2012.   

In the fourth quarter of 2013, home-owner remortgage activity followed a similar trend to December totalling 83,200 loans advanced which was a decrease of 7% compared to the third quarter of 2013 but up 8% compared to the fourth quarter 2012. The total value of these loans totalled £12.3bn which was a decrease of 2% compared to the third quarter of 2013 but up 23% compared to the fourth quarter 2012.

Buy-to-let remortgage lending also increased in the fourth quarter 2013 to 22,680 loans, up 9% compared to the third quarter 2013 and up 42% compared to the fourth quarter last year. The total value of these loans was £3.2bn, up 9% compared to the third quarter 2013 and up 53% compared to the fourth quarter of 2012.

Buy-to-let remortgage lending showed the highest proportional buy-to-let growth, an increase of 29% compared to 2012 bringing the total to 76,260 loans. The loans valued at £10.6bn in total, an increase of 39% compared to 2012.

"The consistent upward lending trend seen throughout 2013 would suggest relative optimism going forward. But there are challenges ahead, not least in implementing the Mortgage Market Review regulation in April and in ensuring that there is no suggestion of a property bubble; and all this will be key to determining how the market will perform in 2014." States Paul Smee CML Director General.

MMR regulations could form another future obstacle, as all checks will become more stringent. The increase in Lending could be in part down to an eagerness by lenders to get ahead before the MMR is brought in in April 2014.

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