On a non-seasonally adjusted basis, UK Finance data shows that mortgage lending in May rose:
- Home buyers borrowed £10.8bn, up 10% on April and 16% on May 2016. This equated to 58,400 loans, up 12% on April and 10% on May 2016.
- Within this, first-time buyers borrowed £4.7bn, up 12% both on last month and on May 2016. They took out 29,200 loans, up 13% month-on-month and 8% year-on-year.
- Home movers borrowed £6.2bn, up 11% on April and 22% year-on-year. This equated to 29,200 loans, up 11% month-on-month and 13% compared to a year ago.
- Home-owner remortgage activity was up 10% by value and 9% by volume on April. Compared to a year ago, remortgage lending was up 12% by value and 7% by volume.
- Gross buy-to-let totalled £2.9bn in May, up 16% on April and 12% compared to May last year. This equated to 19,100 loans, a 16% increase on April and 15% on a year ago.
Paul Smee, Head of Mortgages at UK Finance, commented:
“The apparent strong growth in mortgage lending in May might flatter to deceive. The relative weakness in lending last May following the stamp duty changes makes comparisons misleading. The seasonally adjusted data shows a less buoyant lending picture, with home buying activity remaining relatively unchanged month-on-month and remortgage lending gradually decreasing each month since January.
“In the summer months, we expect home buying activity to continue with an even split between first-time buyers and home movers but in greater numbers than in the winter months; we expect buy-to-let to remain subdued compared to its recent 2015 peak.”
Home-owner house purchase and remortgage lending
On a seasonally adjusted basis, lending to first-time buyers and home movers declined by value and volume in May compared to April, but increased compared to a year ago. Buy-to-let and remortgage activity remained relatively unchanged in May from April.
The proportion of household income used to service capital and interest rates continued to be near historic lows in May for both first-time buyers and home movers at 17.3% and 17.5% respectively.
Affordability metrics for first-time buyers saw the typical loan size increase from £136,300 in April to £137,000 in May. The average household income decreased to £40,500 from £40,700. This meant the income multiple went up from 3.57 to 3.59.
The average amount borrowed by home movers in the UK increased to £177,000 from £176,500 the previous month, while the average home mover household income decreased month-on-month from £55,200 to £54,900. The income multiple for the average home mover went up to 3.38 from 3.35.
Last month, we* [see note to editors no. 2] released a research report evaluating why currently there is a 400,000 deficit in housing transactions in the UK compared to pre-financial crisis levels. The report found that a decrease in home movers was the predominant reason for the dip, and explored the reasons why this was the case. The full report can be read here.
Notes to editors
For further information on the mortgage lending figures please contact:
Tel: 020 7438 8922 / 079 8338 8764
Tel: 020 7438 8924 / 079 8338 8755
1. UK Finance is a new trade association which was formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
2. The ‘missing movers’ research report released last month analysing low housing sales transactions was commissioned by the Council of Mortgage Lenders, now part of UK Finance. When accrediting the report, please cite UK Finance as the source.More Articles by Council of Mortgage Lenders (CML) ...