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Highest quarterly house purchase lending levels since 2007

New CML data 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 21%. 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 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.

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.

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.

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.

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.

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.”

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