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First time buyers up 24% in March

From Property Talk Live on May 20, 2014

The latest CML data on the profile of UK lending in March 2014, including first-time buyer, home mover, re-mortgagor and buy-to-let lending, shows:

– The total number of new loans to home-owners for house purchase increased 4% in March compared to the previous month and was 17% up on March 2013. – The number of loans for home-owner house purchase in the first quarter of 2014 decreased by 16% in comparison to quarter four of 2013, but was up 27% compared to quarter one 2013.
– First-time buyers took out 24,400 loans in March, 24% more than in March last year. In quarter one of 2014, there were 34% more first-time buyer loans compared to the first quarter of 2013.
– Home mover loans was the same in March as in February but the number of loans was 11% higher than in March 2013. In quarter one of 2014, home movers took out 79,000 loans, a decrease of 19% compared to the previous quarter but up 20% on the same period last year.
– The total number of loans taken out by home-owners for remortgage in March was 2% higher than in February and 5% higher than in March 2013. Like other borrower types, remortgage lending fell in quarter one of 2014 compared to quarter four of 2013 by 6% in volume, but increased 14% compared to quarter one 2013.
– Gross buy-to-let loans advanced increased in March by 10% compared to February and up 56% on March last year. First quarter results show gross buy-to-let loans advanced rose just 1% compared to the fourth quarter of 2013 but up 46% in volume compared to quarter one last year.

The Bank of England reported earlier this month gross UK mortgage lending was £15.3 billion in March, a 4% rise compared to February, and up 32% in value compared to March last year.

Overall, lending for home-owner house purchase increased in March with a total of 50,500 loans advanced in the month. This was up 4% compared to February and a 17% increase compared to March last year. The value of new loans to home-owners for house purchase was £8bn, up 3% on February and 27% compared to March last year.

On a quarterly basis, there were 147,800 loans advanced in the first three months of 2014, down 16% compared to the fourth quarter of 2013 due to the usual seasonal dip at this time of year. The new loans were 27% up on the first quarter of 2013.

First-time buyers in March took out 24,400 loans, an increase of 9% compared to February and up 24% compared to March 2013. These loans totalled £3.4bn in value 10% higher than in February and up 36% compared to March 2013.

In the first quarter as a whole, first-time buyers took out 68,800 loans, down 13% on the fourth quarter of 2013 but 34% up on quarter one 2013. The value of these loans totalled £9.6bn, down 12% compared to the previous quarter but up 48% compared to the same period last year.

The typical first-time buyer income multiple decreased slightly, with first-time buyers typically borrowing 3.41 times their gross income, compared to 3.42 in February. The typical loan size for first-time buyers was £118,750 in March, which was unchanged from February. First time buyers’ typical household income fell slightly to £35,704 in March from £36,000 in February.

Low mortgage interest rates have kept borrowers’ payment burden low. First-time buyers spent 19.3% of gross income on capital and interest payments, slightly more than the 19.2% in February.

The number of loans to home movers totalled 26,100 in March, unchanged from February but up 11% compared to March last year. The value of these loans totalled £4.6bn, a decrease of 2% on February but up 18% compared to March 2013.

Overall for the first quarter of 2014, home movers took out 79,000 loans, with a value of £14.2bn. This was 19% fewer, and 16% less by value, than in the fourth quarter of 2013. However, compared with the first quarter of 2013, this was a rise of 20% by volume and 30% by value.

Home-owner remortgage activity in March increased to 25,000 loans, up 2% compared to February and an increase of 5% compared to March 2013. These loans totalled £3.6bn in value, which was unchanged from the previous month but up 16% compared to March 2013.

Remortgage activity in the first quarter of 2014 showed the expected seasonal dip compared to the fourth quarter of 2013 dropping 6% to 78,200 loans in total. This, however, was an increase of 14% compared to the first quarter of 2013. The value of these loans totalled £11.5bn, which again decreased by 7% compared to the previous quarter but was up 28% compared to quarter one 2013.

Buy-to-let lending saw a rise in March by both volume and value on the previous month. There were 16,200 loans advanced, up 56% compared to March 2013. The value of these loans totalled £2.2bn, up by 69% compared to March 2013.

The number of new buy-to-let loans in the first quarter of 2014 rose slightly on the fourth quarter of 2013 to 47,000, up 1% on the previous quarter and 46% on the first quarter of 2013. The value of these loans was £6.3bn, an increase on the fourth quarter of 2013 of 3% but up 54% compared to the first quarter of 2013.

Similarly, buy-to-let lending for house purchase increased to 8,040 loans advanced, up 8% compared to February and up 46% compared to March 2013. The loans totalled £960m in March, which was up 8% on February and up 60% in value compared to the same month last year.

Buy-to-let lending for house purchase in the first quarter of 2014 followed a similar pattern to gross buy-to-let lending, remaining unchanged compared to the fourth quarter of 2013 with 23,610 loans advanced. This was however up 38% in volume compared to the first quarter of 2013. The value of these loans was £2.8bn, up 3% quarter-on-quarter but up more substantially year-on-year compared to the first quarter of 2013 by 51%.

Buy-to-let remortgage lending saw the most substantial upward trend increasing month-on-month to 8,000 loans, up 13% in volume compared to February and up 67% compared to March 2013. These buy-to-let remortgages had a total value of £1.2bn, up 13% compared to the previous month and up 73% compared to March 2013.

In quarter one of 2014, buy-to-let remortgage lending remained consistent with the previous quarter totalling 23,000 loans, an increase of 1%, but a lager year-on-year increase on the first quarter of 2013 of 55%. These loans totalled in value £3.3bn, which was again a modest increase of 3% on the fourth quarter of 2013 but up 67% on the first quarter of 2013.

Paul Smee, director general of the CML, commented:

“All types of lending show positive year-on-year growth but the rate of increase is not as frenetic as at the end of 2013. Buy-to-let lending continues to recover and regain market share.

“The FCA’s new regulation of mortgages has now been introduced, but it will still be some time until we can assess its effect on the market. The industry was ready for the transition, and already actively implementing many of the changes prior to April. We do not anticipate prolonged disruption to the market as a consequence. But we still see affordability constraints as an important factor in determining the level of demand for mortgages which we see over the next year.”

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Source: Property Talk Live