First time buyer numbers jump 38% in a year. Buy to let mortgages jump 40%

13th March 2014

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The number of first time buyers has jumped 38% in a year figures from the Council of Mortgage Lenders have revealed. The total number of home-owner loans for house purchase in January 2014 was down 16% compared to December 2013 but up 30% on January 2013.

The total number of loans advanced to home-owners for house purchase decreased in January, down 16% compared to December but up 30% on January 2013. Overall, 48,600 loans were advanced in January with a total in value of £8bn, which was a decrease of 14% in value on December 2013 but a 43% increase in comparison to January 2013.

Table 1: Loans for home-owner house purchase and remortgage

Number of house
purchase loans
Value of house
purchase loans, £m
Number of
remortgage loans
Value of remortgage
loans, £m
January
2014
48,600 8,000 28,000 4,200
Change from
December 2013
-16.0% -14.0% 10.2% 10.5%
Change from
January 2013
30.3% 42.9% 15.7% 31.3%

The total number of loans advanced to first-time buyers in January totalled 21,800, down 18% on December 2013 – loans typically fall back after Christmas, but an this was an increase of 38% compared to January 2013. The total value of these loans was £3.1bn which the trade body says it also down 16% on December 2013, but a year-on-year increase of 55% in comparison to January 2013.

The typical first-time buyer income multiple decreased, with first-time buyers typically borrowing 3.39 times their gross income in January, compared to 3.43 in December 2013.

First-time buyers in January spent 19.3% of gross income to cover capital and interest payments, slightly higher than the 19.2% in December 2013 but down from 19.8% in January 2013. In addition, over 95% of first-time buyers opted for fixed rate mortgages in January.

It appears that the introduction of the Help to Buy mortgage guarantee scheme has started to have an impact on FTB deposit requirements says the CML.  The average loan-to-value for first-time buyers was 82% in January, up from 80% seen in December 2013 and a year previous in January 2013.

Table 2: First-time buyers, lending and affordability

Number of loans Value of loans £m Average loan to value Average income multiple Proportion of income spent on interest payments Proportion of income spent on capital and interest payments
January 2014 21,800 3,100 82% 3.39 11.3% 19.3%
Change from
December 2013
-18.4% -16.2% 80% 3.43 11.1% 19.2%
Change from
January 2013
38.0% 55.0% 80% 3.23 12.9% 19.8%

The number of loans advanced to home movers for house purchase totalled 26,800 in January, down 15% in volume compared to December but up by 25% compared to January 2013. Home mover loans totalled £4.9bn in value in January, which was a month-on-month decrease of 13% compared to December, but up 36% compared to January 2013.

Table 3: Home movers, lending and affordability

Number of loans Value of loans £m Average loan to value Average income multiple Proportion of income spent on interest payments Proportion of income spent on capital and interest payments
January
2014
26,800 4,900 70% 2.99 8.6% 18.6%
Change from
December 2013
-14.9% -12.5% 71% 3.04 8.4% 18.3%
Change from January 2013 24.7% 36.1% 69% 2.87 9.6% 18.9%

Lending for remortgaging

In contrast to the month-on-month decrease in lending for home-owner house purchase, home-owner remortgage activity increased in January with a total of 28,000 remortgage loans advanced, up 10% in volume compared to December and up 16% compared to January 2013. These loans totalled £4.2bn in value, an increase of 11% on December and up 31% compared to January 2013.

Buy-to-let lending

Gross buy-to-let advances in January totalled 15,700 loans, which was up 8% compared to December 2013 and up 37% compared to January 2013. The value of these loans totalled £2.1bn, which was an increase of 11% compared to December and up 40% compared to January 2013.

Similarly, Buy-to-let loans for house purchase followed the same trend up 11% in January to 8,100 loans in total compared to December, and up 34% compared to January last year. The loans totalled £900m in value, which again was up 7% compared to December and up 32% compared to January 2013.

In parallel to this, buy-to-let remortgage lending increased in January to 7,500 loans, which was up 6% compared to December and up 42% compared to January 2013. These buy-to-let remortgages had a total value of £1.1bn, up 10% compared to December and a year-on-year increase of 55% compared to January 2013.

Table 4: Loans for buy-to-let house purchase and remortgage

 Number of Gross BTL advances in period Value of Gross BTL advances, £m Number of BTL house purchase loans Value of BTL house purchase loans, £m Number of BTL
remortgage loans
Value of BTL remortgage
loans, £m
January
2014
15,700 2,100 8,100 900 7,500 1,100
Change from
December 2013
8.3% 10.5% 11.3% 7.1% 6.2% 10.0%
Change from January 2013 36.5% 40.0% 33.7% 32.4% 41.5% 54.9%

 

Paul Smee, director general of the CML says:”January is always a subdued month in the mortgage market but the underlying trend and strong year-on-year growth across all borrower groups indicates a strong start to 2014 continuing the sort of lending levels seen throughout 2013. Lending to first-time buyers and home movers has continued its upward trend and this, coupled with the growth in remortgage and buy-to-let activity, would suggest that all parts of the market are open for business.”

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