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Jason Tebb

Jason Tebb is the founder of Ivy Gate. He regularly comments on the UK and International property market on multiple media channels.
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AUGUST HOUSE PURCHASE LENDING UP 11% COMPARED TO A YEAR AGO

On an unadjusted basis, in August:

  • Home-owners borrowed £12.2bn for house purchase, up 14% month-on-month and 11% year-on-year. They took out 66,000 loans, up 13% on July and 9% on August 2015.
  • First-time buyers borrowed £5.1bn, up 13% on July and 24% on August last year. This equated to 31,800 loans, up 12% month-on-month and 19% year-on-year. 
  • Home movers borrowed £7.1bn, up 15% on July and 3% compared to a year ago. This represented 34,200 loans, up 14% month-on-month and 2% on August 2015.
  • Remortgage activity totalled £5.9bn, down 2% on July but up 41% compared to a year ago. This came to 34,900 loans, up 4% month-on-month and 40% compared to a year ago.
  • Landlords borrowed £3bn, unchanged month-on-month but down 12% year-on-year. This came to 19,400 loans in total, up 4% compared to July but down 13% compared to August 2015.

The CML now publishes seasonally adjusted monthly data (see attached), alongside the normal unadjusted data. This makes it easier to spot underlying trends.

Paul Smee, director general of the CML, commented:

“House purchase activity bounced back from a dip in July, reflecting resilience in first-time buyer activity.  Mortgage rates remain at or close to historic lows, and the re-pricing of mortgages following August’s base rate cut should help to underpin a continuing, strong appetite for home-ownership over the coming months. 

“Buy-to-let by contrast continues to operate at lower levels five months after the stamp duty change on second properties. This appears to be a long-term trend, and with lenders potentially tightening affordability checks ahead of the tax changes in April 2017, activity on the buy-to-let house purchase side may well remain at current levels.”

Home-owner house purchase lending

Both the number and the value of first-time buyer loans grew on a seasonally adjusted basis, as well as the unadjusted raw data. The monthly number of first-time buyers in August was the second highest of 2016.

The number of home mover loans was also the second highest monthly figure of 2016, after March, and the highest August level since 2013, but on a seasonally adjusted basis lending to home movers was weaker than to first-time buyers.

Affordability metrics for first-time buyers have remained relatively stable. The typical loan size increased to £136,300 in August from £133,000 in July, against average household income up slightly from £40,200 in July to £40,900 in August. This meant the income multiple was slightly up from 3.55 to 3.56.

The average amount borrowed by home movers in the UK increased to £175,000 in August from £172,000 in July, while the average home mover household income also increased to £55,400 from £55,000. The income multiple for the average home mover went from 3.29 to 3.27 month-on-month.

The number of home-owner remortgages rose to reach its highest monthly level since July 2009, although by value remortgaging was lower than the previous month.

Chart 1: Number of loans to home-owners, 2007-2016

Source: CML Regulated Mortgage Survey 

Buy-to-let lending in August

Gross buy-to-let lending remained substantially down on year earlier levels but there were 1,000 more buy-to-let loans than in August than in July. Nearly two thirds of buy-to-let loans were remortgages rather than house purchase.

Chart 2: Number of loans for buy-to-let, 2007-2016

 

Source: CML Economics (pre-2013 data based on quarterly data)

Table 1: Number of loans for house purchase and remortgage in August

 

House purchase

Remortgage

 

FTBs

Movers

Buy-to-let

Home owners

Buy-to-let

August 2015

26,700

33,700

10,600

25,000

11,500

July 2016

28,300

30,000

6,000

33,500

12,300

August 2016

31,800

34,200

6,500

34,900

12,800

1 month change

+12.4%

+14.0%

+8.3%

+4.2%

+4.1%

12 month change

+19.1%

+1.5%

-38.7%

+39.6%

+11.3%

Table 2: Value of loans for house purchase and remortgage in August

 

House purchase (£m)

Remortgage (£m)

 

FTBs

Movers

Buy-to-let

Home owners

Buy-to-let

August 2015

4,100

6,900

1,400

4,200

1,900

July 2016

4,500

6,200

900

6,000

2,100

August 2016

5,100

7,100

1,000

5,900

2,000

1 month change

+13.3%

+14.5%

+11.1%

-1.7%

-4.8%

12 month change

+24.4%

+2.9%

-28.6%

+40.5%

+5.3%

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