First-time Buyers
No fear of housing bubble, says CML
Guest Author:
Emma LunnAll types of lending declined in August compared to July, according to the Council of Mortgage Lenders (CML).
The CML’s monthly report found that both first-time buyer numbers and home movers declined in August compared to July, but were up on August last year.
Remortgage lending activity saw a decrease month-on-month and also year-on-year, while buy-to-let lending was down on July but up from August last year.
The figures show that 28,900 first-time buyer loans completed in August, 4% fewer than in July but 9% up on August 2013. By value, there was £4.4bn of lending to first-time buyers; 4% down on July but 22% higher than August last year. The typical loan size of a first-time buyer also fell slightly month-on-month to £126,198 in August, down from £127,500 in July.
Home mover loans also declined, with the number of loans advanced to movers totalling 36,500, a 3% fall on the previous month but up 7% on August last year. By value, lending to movers totalled £7bn, 3% down on July but up 17% on August last year. The typical loan size for home movers was £156,750 in August, up from £155,999 in July.
The number of remortgages in August was 4% down on July and 11% down on the same month last year. The value of these loans (£3.7bn) was down 5% on the previous month and down 3% year-on-year.
Buy-to-let lending fell 13% over the month to £2.1bn in August, but increased 11% compared to August last year.
According to the Bank of England, total gross lending in August was £18.1bn. This was 8% lower than July (£19.7bn) but 10% higher than August last year (£16.4bn).
Paul Smee, director general of the CML, (pictured) said: “The lending climate had a glass half full, glass half empty feel about it in August. On the one hand it saw a decline in all lending types month-on-month, which would suggest a levelling off of the market, and remortgaging remained flat.
He continued:”Yet, on the other hand, we saw the highest August house purchase lending levels since 2007, and the recent Bank of England Credit Conditions Survey expects an upward trend in remortgaging in the final months of the year. Overall, these figures give no support to any fears of a developing bubble in housing.
“This has been a year of major change, and the market has shown significant resilience and responsiveness to the changing environment, improving the availability of lending without compromising financial stability, as the Bank of England’s assessment last week highlighted.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “The brakes are starting to be applied to what once seemed a rocketing housing market, with both house price growth and mortgage lending easing in recent months. The stricter lending criteria introduced by the Mortgage Market Review (MMR) has resulted in a slight dampening of demand, ushering in a more relaxed pace of purchase applications and reduced house price growth.”