Gross UK mortgage lending rose 12% in July to £16.7 billion, up from £14.9 billion in June and 29% on last July, according to the latest survey figures from the Council of Mortgage Lenders.
It said that this growth in July continued to be buoyed by home owner house purchase lending, in particular by growth in first time buyers.
Total home owner house purchase lending continued to grow, up 9% on June and 21% on July last year. First time buyers took out 25,300 loans in July, an increase of 5% on June and of 41% compared to July 2012 and home movers took out 32,000 loans, an increase of 12% compared to June and up 9% on July last year.
Home owner remortgage lending continued to pick up compared to July 2012 and recent months, although the £3.8bn advanced remains subdued compared to historical volumes. Total buy to let loans advanced increased to 15,200 in July, up 12% compared to June. Within this, 7,600 buy to let loans in July were for house purchase, up by 7% compared to June.
In contrast to the picture in the home owner market, buy to let remortgage lending grew more strongly than house purchase, increasing by 24% compared to June to £1.1 billion.
The strong growth in lending to first time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first time buyers, worth £3.5 billion. By value, first time buyer lending was 6% up on June and 46% up on July last year.
The typical first time buyer loan size stayed almost unchanged from June at £117,038, while average first time buyer household income increased to £36,142 from £35,873 in June.
Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments, capital and interest, accounted for 19.2% of income, down from 19.3% in June.
Lending to home movers showed strong growth in July, with 32,000 loans advanced, up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6 billion, an increase of 17% compared to June and 12% compared to July last year.
The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.
Lending to home owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8 billion was advanced in July to home owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.
Lending for buy to let has continued to follow an upward trend, similar to the market overall. 15,200 buy to let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.
Lending for buy to let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.
There was strong growth in buy to let remortgage lending which increased by 24% in July compared to June, a value of £1.1 billion. This equated to 7,200 loans in July for buy to let remortgage in total, an increase by 13.4% on June 2013.
'The notable feature is the catch up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing,' said Paul Smee, director general of the CML.
According to David Newnes, director of LSL Property Services, it is government schemes that have helped more first time buyers realise their dreams of home ownership. 'The Funding for Lending and Help to Buy schemes have energised the market and got it bristling with electricity, which is giving more first-time buyers the means and the will to get a foot on the housing ladder,' he said.
He pointed out that the choice of mortgages is at its widest since the financial crisis. 'Rates are cheap, and lenders are more willing to extend an olive branch to high loan to value borrowers. Confidence is spreading through the market, which should help to sustain the broader improvement we've seen over the last six months well into the back end of 2013 and beyond,' he explained.
But the issue is what happens in five or even 10 years. 'There is a critical shortfall in house building, which means demand will accelerate away from supply. That could inflate house prices unsustainably quickly, and freeze the next wave of first time buyers out of the market. Lenders are not opening the flood gates and suddenly abandoning or substantially changing criteria for borrowers, and this will have a dampening effect on increased lending,' he warned.
'At the end of the first quarter 2014 the revised Mortgage Market Regulations also come into force and this too will contribute to controlling the burst of lending we've seen in first half of 2013. We've already seen that deposits are starting to become more expensive now house prices have risen. Salary growth is very weak at the moment, which makes it difficult for buyers who don't have private wealth or the bank of mum and dad to lean on,' he added. propertywire
It said that this growth in July continued to be buoyed by home owner house purchase lending, in particular by growth in first time buyers.
Total home owner house purchase lending continued to grow, up 9% on June and 21% on July last year. First time buyers took out 25,300 loans in July, an increase of 5% on June and of 41% compared to July 2012 and home movers took out 32,000 loans, an increase of 12% compared to June and up 9% on July last year.
Home owner remortgage lending continued to pick up compared to July 2012 and recent months, although the £3.8bn advanced remains subdued compared to historical volumes. Total buy to let loans advanced increased to 15,200 in July, up 12% compared to June. Within this, 7,600 buy to let loans in July were for house purchase, up by 7% compared to June.
In contrast to the picture in the home owner market, buy to let remortgage lending grew more strongly than house purchase, increasing by 24% compared to June to £1.1 billion.
The strong growth in lending to first time buyers since the beginning of the year has continued, with the number of loans advanced increasing by 5% compared to June. In July, 25,300 loans were advanced to first time buyers, worth £3.5 billion. By value, first time buyer lending was 6% up on June and 46% up on July last year.
The typical first time buyer loan size stayed almost unchanged from June at £117,038, while average first time buyer household income increased to £36,142 from £35,873 in June.
Affordability improved marginally in July compared to June reflecting the average loan size remaining largely unchanged but a higher income average, alongside a further fall in typical interest rates. Typically, first time buyers in July borrowed 3.31 times their income in comparison to 3.33 in June and mortgage payments, capital and interest, accounted for 19.2% of income, down from 19.3% in June.
Lending to home movers showed strong growth in July, with 32,000 loans advanced, up by 12% compared to June and 9% compared to July last year. By value, movers borrowed £5.6 billion, an increase of 17% compared to June and 12% compared to July last year.
The percentage of income spent on mortgage payments by home movers remained relatively similar to June 2013, increasing from 18.2% to 18.3% in July. However, this was a decrease in comparison to July 2012 when it was 19.3%.
Lending to home owners for remortgage increased by 9% in July compared to June but still remains subdued compared to historical volumes. In total, £3.8 billion was advanced in July to home owners for remortgages which represented a 9% increase in value on June and a 15% increase on July last year.
Lending for buy to let has continued to follow an upward trend, similar to the market overall. 15,200 buy to let loans were advanced in July, an increase of 12% compared to June. This represents a value of £2bn which was 11% higher than in June.
Lending for buy to let house purchase was up 7% in July compared to June, a total of 7,600 loans. The value of these loans was £900m, up 13% from June.
There was strong growth in buy to let remortgage lending which increased by 24% in July compared to June, a value of £1.1 billion. This equated to 7,200 loans in July for buy to let remortgage in total, an increase by 13.4% on June 2013.
'The notable feature is the catch up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing,' said Paul Smee, director general of the CML.
According to David Newnes, director of LSL Property Services, it is government schemes that have helped more first time buyers realise their dreams of home ownership. 'The Funding for Lending and Help to Buy schemes have energised the market and got it bristling with electricity, which is giving more first-time buyers the means and the will to get a foot on the housing ladder,' he said.
He pointed out that the choice of mortgages is at its widest since the financial crisis. 'Rates are cheap, and lenders are more willing to extend an olive branch to high loan to value borrowers. Confidence is spreading through the market, which should help to sustain the broader improvement we've seen over the last six months well into the back end of 2013 and beyond,' he explained.
But the issue is what happens in five or even 10 years. 'There is a critical shortfall in house building, which means demand will accelerate away from supply. That could inflate house prices unsustainably quickly, and freeze the next wave of first time buyers out of the market. Lenders are not opening the flood gates and suddenly abandoning or substantially changing criteria for borrowers, and this will have a dampening effect on increased lending,' he warned.
'At the end of the first quarter 2014 the revised Mortgage Market Regulations also come into force and this too will contribute to controlling the burst of lending we've seen in first half of 2013. We've already seen that deposits are starting to become more expensive now house prices have risen. Salary growth is very weak at the moment, which makes it difficult for buyers who don't have private wealth or the bank of mum and dad to lean on,' he added. propertywire
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