First-time buyer activity levels increase

New CML data released on the profile of UK lending in December 2013, including first-time buyer, home mover, remortgagor and buy-to-let lending, shows:

– The total number of home-owner loans for house purchase in December 2013 was down 1% compared to November but up 27% on December 2012.
– The number of first-time buyers and home movers taking out loans continued to grow in December increasing year-on-year by 37% and 19% respectively in volume compared to December 2012.
– Remortgage lending in December was down 10% in volume compared to November, but up 16% year-on-year.
– Buy-to-let loans for house purchase decreased 10% in December 2013 in volume compared to November. Buy-to-let remortgage lending also decreased 10% compared to November.

The CML has also created profiles of UK lending in the fourth quarter of 2013 and for the year as a whole. CML data shows:

– Strong home-owner house purchase numbers through 2013 continued into the closing months resulting in a 19% year-on-year increase in volume in the fourth quarter 2013 and overall 2013 was up 11% on 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.
– Home mover lending continued to pick up with a 13% rise in the volume of lending for house purchase in the fourth quarter compared to the same period in 2012. This meant a 3% rise overall in 2013 compared to 2012.
– Although not as strong as house purchase, remortgage lending showed growth in the last quarter of 2013, up 8% year-on-year for that quarter, resulting in a 2% yearly increase in 2013 compared to 2012.
– Buy-to-let lending also finished strongly in the last quarter of 2013, up 20% compared to the last quarter of 2012, in addition, buy-to-let loans for house purchase increased 18.6% in 2013 compared to 2012.

The Bank of England reported earlier this month that UK gross mortgage lending was £16.8 billion in December, which due to the expected seasonal dip was down slightly by 1% but up 49% compared to December 2012. In the fourth quarter of 2013, gross UK mortgage lending totalled £51.4bn which was an increase of 36% compared to the fourth quarter of 2012. Overall for 2013 gross lending totalled £176.4bn, up 21% on 2012.

Commenting on the data, CML director general Paul Smee said:

“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.”

“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.”

Paul Hunt, managing director of Phoebus Software said: “Compared to the difficult lending conditions a year ago, the mortgage market today is almost unrecognisable.

“Record low interest rates have sent ripples of fluidity throughout the market and unleashed a barrage of first-time buyers.

“It’s not the just the sheer scale of the recovery that is astonishing, but also the speed at which it is accelerating. In fact, not only are first-time buyer numbers up. House purchase lending is inching up annually, along with increased high LTV lending and remortgaging levels are up annually which is encouraging. Growth in the property market has been supported by the Government’s Help to Buy scheme , which has kick-started the market from the bottom tier. It’s enabling thousands more people to realise their dream of homeownership. Now, rates are cheap, there’s a greater array of high loan-to-value mortgages available. Lenders have been proactive in their approach, by lending to a range of buyers including those with small deposits, by promoting a greater product choice. The signs show the mortgage market has turned a corner, having found a way to substantially boost activity in the property market.”

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