CML: home movers at post-crisis high

The CML's latest analysis shows that of both value and volume, December saw the highest yearly amount of activity for home movers since 2007.

Related topics:  Finance News
Rozi Jones
17th February 2015
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Overall for 2014, home movers were advanced a total of 365,400 loans for house purchase in 2014, up 8% on 2013. The value of these loans (£67.6bn) also increased by 16% on the previous year.

In December, the number of loans advanced to home movers was 29,500, the same as November but down 8% on December 2013. By value, lending to movers totalled £5.5 billion, up 2% on November but 2% down on December 2013.

However remortgage lending activity saw a decline month-on-month in December with the number of remortgage loans totalling 22,300 - 7% down on November and 13% down on December 2013. The value of these loans (£3.4 billion) was down 6% on the previous month and down 11% on December the previous year.

Home movers' payment burden remained relatively low in December at 18.3% of gross income being spent to cover monthly capital and interest payments, down from 18.4% in November, and well below the recent peak of 23.8% in December 2007.

Home movers were advanced 93,100 loans in the fourth quarter, a decline of 8% compared to the third quarter and 5% down year-on-year. These loans totalled in value £17.2bn - 10% down on the previous quarter, but unchanged compared to the fourth quarter of 2013.

Home movers in the fourth quarter of 2014 saw the average loan-to-value ratio improvement to 3.03, down from 3.05 in the third quarter, and the average percentage of gross income paid towards capital and interest repayments decreased to 18.4% from 18.8%. However, the average total household income of a home movers, similarly to first-time buyers, declined slightly from £53,854 to £53,193, but this was countered by a decrease in the average mortgage size quarter-on-quarter from £155,325 to £153,500.

Remortgage lending declined this quarter with 73,100 loans advanced - down 3% on the third quarter and 13% down on the fourth quarter 2013. The value of these loans (£11.1 billion) declined 4% quarter-on-quarter and 10% year-on-year compared to the fourth quarter 2013.

Paul Smee, director general of the CML, commented:

"In 2014, the mortgage market saw unprecedented change with the introduction of major regulatory reform but the market has adjusted and kept its stability throughout. There will be challenges in 2015, including preparation work on the European Directive implementation and a General Election potentially bringing new housing policies to be put in place. But the industry is stronger than a year ago and ready to meet the challenges going forward."

Mark Harris, chief executive of mortgage broker SPF Private Clients, says:

"Remortgaging continued to decline despite the fantastic mortgage rates available. It may be that many borrowers are deterred from even attempting to remortgage because of more stringent rules post the Mortgage Market Review. However, with many of these borrowers sitting on relatively high standard variable rates it makes sense for them to seek independent advice to find out what options are available to them."

Danny Waters, Chief Executive Officer of Enterprise Finance, said:
 
“Remortgaging activity continues to decline on both a monthly and yearly basis and hasn’t actually registered an annual improvement since the summer. This is despite a raft of attractive products on offer and the Bank Base Rate at a historic low and murmurs it may fall further still. This would suggest that homeowners are gambling on further reductions or are trapped on their current home loan; possibly because their original product is not compatible with current affordability requirements.
 
“It also suggests that some homeowners wanting to access capital are already on a competitive mortgage rate and don’t want to jeopardise this by remortgaging on to a potentially less favourable rate. Such individuals are considering alternative methods of finance such as secured loans.”

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