MORTGAGE COSTS REACH HISTORIC LOW POINT IN SEPTEMBER
On an unadjusted basis, in September:
- Home-owners borrowed £11.4bn for house purchase, down 7% month-on-month but up 4% year-on-year. They took out 62,900 loans, down 5% on August but up 3% on September 2015.
- First-time buyers borrowed £4.9bn, down 4% on August but up 14% on September last year. This equated to 31,500 loans, down 1% month-on-month but up 13% year-on-year.
- Home movers borrowed £6.5bn, down 9% on a month ago and 3% compared to a year ago. This represented 31,400 loans, down 8% month-on-month and 5% on September 2015.
- Remortgage activity totalled £5.5bn, down 7% on August but up 8% compared to a year ago. This came to 31,500 loans, down 10% month-on-month but up 2% compared to a year ago.
- Landlords borrowed £2.8bn, down 7% month-on-month and 22% year-on-year. This came to 18,200 loans in total, down 6% compared to August and 26% compared to September 2015.
On an unadjusted basis, in the third quarter:
- Home-owners borrowed £34.3bn for house purchase, up 16% quarter-on-quarter and 1% year-on-year. They took out 187,200 loans, up 12% on the second quarter but down 1% on the third quarter 2015.
- First-time buyers borrowed £14.5bn, up 8% on the second quarter and 12% on the third quarter last year. This equated to 91,600 loans, up 7% quarter-on-quarter and 8% year-on-year.
- Home movers borrowed £19.8bn, up 22% on the last quarter but down 6% compared to a year ago. This represented 95,600 loans, up 17% quarter-on-quarter but down 8% on the same quarter in 2015.
- Remortgage activity totalled £17.5bn, up 5% on the second quarter and 22% on the same quarter a year ago. This came to 100,100 loans, up 3% quarter-on-quarter and 16% compared to a year ago.
- Landlords borrowed £8.8bn, up 10% quarter-on-quarter but down 19% year-on-year. This came to 56,200 loans in total, up 9% compared to the second quarter but down 24% compared to the third quarter in 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 appears to have steadied, we may not be seeing huge increases in activity on the scale of 2013-14 but there is a consistency in the levels in recent months. Mortgage affordability reached an historic low in September, for both first-time buyers and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut. This should help turn strong appetite for home-ownership into a reality as we approach the closing months of the year.
“Six months on since the stamp duty changes on second properties and buy-to-let continues to operate at lower levels than a year ago. But lending for buy-to-let house purchase and remortgaging has settled at its current level over the last four months.”
Home-owner house purchase lending
The amount borrowers are paying as a percentage of their household income to service capital and interest rates reached a historic low this month for both first-time buyers and home movers, 17.8% and 17.7% respectively.
Affordability metrics for first-time buyers saw the typical loan size decrease to £133,000 in September from £136,400 in August. The average household income also decreased slightly from £41,000 in August to £40,200 in September. This meant the income multiple was slightly down from 3.56 to 3.53.
The average amount borrowed by home movers in the UK also decreased to £171,000 in September from £175,000 in August, while the average home mover household income also decreased to £55,100 from £55,400. The income multiple for the average home mover went from 3.27 to 3.26 month-on-month.
While there was a decline in house purchase lending in September compared to a month before, this is the highest volume of loans and most amount borrowed in the month of September since September 2007.This was mirrored in first-time buyer trends as this was the highest volume of loans in the month of September since September 2006.
On a seasonally adjusted basis, most lending trends were relatively similar. However, first-time buyer loans by value increased both month-on-month and year-on-year. Home movers saw an increase by value compared to August.
Remortgage loans saw a decline month-on-month but an increase year-on-year in September. On a quarterly basis, there were more loans advanced for remortgage than any quarter since the third quarter of 2011.
Chart 1: Number of loans to home-owners, 2007-2016
Source: CML Regulated Mortgage Survey
Buy-to-let lending in September
Gross buy-to-let lending declined in September compared to August and remained down on year earlier levels but, on a quarterly basis, lending went up in the third quarter compared to the second quarter. 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 September
|
|
House purchase |
Remortgage |
|||
|
|
FTBs |
Movers |
Buy-to-let |
Home owners |
Buy-to-let |
|
September 2015 |
28,000 |
33,100 |
11,100 |
30,800 |
12,500 |
|
August 2016 |
31,800 |
34,200 |
6,500 |
35,000 |
12,800 |
|
September 2016 |
31,500 |
31,400 |
6,400 |
31,500 |
11,500 |
|
1 month change |
-0.9% |
-8.2% |
-1.5% |
-10.0% |
-10.2% |
|
12 month change |
+12.5% |
-5.1% |
-42.3% |
+2.3% |
-8.0% |
Table 2: Number of loans for house purchase and remortgage in the third quarter
|
|
House purchase |
Remortgage |
|||
|
|
FTBs |
Movers |
Buy-to-let |
Home owners |
Buy-to-let |
|
Q3 2015 |
84,600 |
103,800 |
33,500 |
86,200 |
37,200 |
|
Q2 2016 |
86,000 |
81,500 |
14,700 |
97,600 |
35,900 |
|
Q3 2016 |
91,600 |
95,600 |
18,900 |
100,100 |
36,600 |
|
1 quarter change |
+6.5% |
+17.3% |
+28.6% |
+2.6% |
+1.9% |
|
1 year change |
+8.3% |
-7.9% |
-43.6% |
+16.1% |
-1.6% |
Table 3: Value of loans for house purchase and remortgage in September
|
|
House purchase (£m) |
Remortgage (£m) |
|||
|
|
FTBs |
Movers |
Buy-to-let |
Home owners |
Buy-to-let |
|
September 2015 |
4,300 |
6,700 |
1,500 |
5,100 |
2,100 |
|
August 2016 |
5,100 |
7,100 |
1,000 |
5,900 |
2,000 |
|
September 2016 |
4,900 |
6,500 |
900 |
5,500 |
1,900 |
|
1 month change |
-3.9% |
-8.5% |
-10.0% |
-6.8% |
-5.0% |
|
12 month change |
+14.0% |
-3.0% |
-40.0% |
+7.8% |
-9.5% |
Table 4: Value of loans for house purchase and remortgage in the third quarter
|
|
House purchase (£m) |
Remortgage (£m) |
|||
|
|
FTBs |
Movers |
Buy-to-let |
Home owners |
Buy-to-let |
|
Q3 2015 |
13,000 |
21,000 |
4,500 |
14,300 |
6,200 |
|
Q2 2016 |
13,400 |
16,200 |
2,100 |
16,700 |
5,800 |
|
Q3 2016 |
14,500 |
19,800 |
2,800 |
17,500 |
6,000 |
|
1 quarter change |
+8.2% |
+22.2% |
+33.3% |
+4.8% |
+3.4% |
|
1 year change |
+11.5% |
-5.7% |
-37.8% |
+22.4% |
-3.2% |
