The latest official figures show that the recovery in the UK’s large
mortgage market is alive and well and continued into the third quarter
of 2013. The most recent data from the Council of Mortgage Lenders (CML)
showed that 27.1 billion of house purchase loans were advanced between
July and September, the highest quarterly figure since the end of 2007.
Lending to first time buyers is up by a third year-on-year while buy to
let lending is up 36 per cent. We look at the latest figures that show
the high value mortgage market in the UK is recovering strongly.
First time buyers driving the large mortgage market
Despite a small drop in lending in September, the UK’s large mortgage
sector has grown strongly in the past year according to CML
figures.Lending to first-time buyers was up 34 per cent in September
2013 compared to September 2012 while buy to let lending was 36 per cent
higher in the third quarter of 2013 than in the same period last year.
Paul Smee, director general of the CML, said that the typical seasonal
fall in lending in September was expected but the market is seeing
appreciable year-on-year and quarterly lending rises that suggest the
market is continuing its recovery.
He said that first-time
buyers were a key driver in the first half of 2013 but now home movers
and remortgages are showing renewed strength which puts the market in a
good position to continue momentum into the final few months of 2013 and
the new year.
In the third quarter of 2013, 74,800 loans were
advanced to first-time buyers witha value of 10.4billion.The typical
first-time buyer income multiple continued an upward trend with
first-time buyers typically borrowing 3.39 times their gross income.
And, high value mortgage customers are increasingly choosing fixed rate
deals. Jeremy Duncombe, director, Legal & General Mortgage Club,
said that 2013 had seen a revival in fixed rate products. 86 per cent of
all house purchases and re-mortgages in August were taken out with a
fixed rate mortgage deal. This is compared to 67 per cent for August
2012 and 77 per cent at the peak of the housing boom in August 2007.
He pointed out that the popularity of fixed products is in part due to
the historically low rates currently available.The average rate in
August 2013 was 3.31per cent, compared to 4.25 per cent and 5.86 per
cent for the same periods in 2012 and 2007 respectively.
Buy to let lending also booming
The CML figures showed that 1.9 billion of buy to let loans were
advanced in September, unchanged from August. Overall, buy-to-let
lending in the third quarter of 2013 grew with 43,900 loans advanced in
this quarter which was up 16 per cent on the second quarter and up 36
per centon the same period last year.
Both buy to let purchase
and remortgage lending has increased in recent months, suggesting that
landlords are keen to withdraw equity from their properties in order to
reinvest.
Islay Robinson, CEO of London mortgage adviser Enness
Private Clients, said “There are some excellent buy to let deals
available in the market and so many clients are taking advantage of
these low rates. Whether it’s simply to reduce their borrowing costs or
to withdraw capital to expand their portfolios, there are plenty of
great large mortgagedeals available”.