35,600 loans (worth £5.3 billion) were taken out for house purchase in January. This is a rise of 22% by volume and 23% by value from a year ago but a fall of 25% by volume and 24% by value on December 2011. This reflects the normal seasonal pattern where cold weather, lack of daylight and post-Christmas cash flow problems in January are likely to deter buyers from moving house.
Loans for house purchase and remortgage
Number of house purchase loans:
- January 2012: 35,600
- Change from December 2011: -25%
- Change from January 2011: 22%
Value of house purchase loans £m:
- January 2012: 5,300
- Change from December 2011: -24%
- Change from January 2011: 23%
Number of remortgage loans:
- January 2012: 26,600
- Change from December 2011: -6%
- Change from January 2011: 13%
Value of remortgage loans, £m:
- January 2012: 3,500
- Change from December 2011: -3%
- Change from January 2011: -5%
January saw a drop in both the number and value of loans taken out for remortgage. 26,600 loans (worth £3.6 billion) were taken out, down from 28,200 (worth £3.5 billion) in December. Remortgage lending experienced its first year-on-year fall since the end of 2010, with the number of loans down 13% and the value down 5% from January 2011.
First-time buyers, lending and affordability
Number of loans:
- January 2012: 13,200
- Change from December 2011: -30%
- Change from January 2011: 23%
Value of loans £m:
- January 2012: 1,600
- Change from December 2011: -30%
- Change from January 2011: 23%
Average loan to value:
- January 2012: 80%
- Change from December 2011: 80%
- Change from January 2011: 79%
Average income multiple:
- January 2012: 3.20
- Change from December 2011: 3.30
- Change from January 2011: 3.16
Proportion of income spent on interest payments:
- January 2012: 12.2%
- Change from December 2011: 12.3%
- Change from January 2011: 12.6%
The number of both first-time buyers and home movers in January increased from the year before but fell from December. The number and value of first-time buyer mortgages fell 30% from December but rose by 23% from January 2011.
Home mover numbers fell from 28,900 (worth £4.7 billion) in December to 22,400 (worth £3.6 billion) in January. Like first-time buyers, there was a significant increase in numbers from the previous January, when 18,600 home movers took out loans worth £3.1 billion.
Home movers, lending and affordability
Number of loans:
- January 2012: 22,400
- Change from December 2011: -22%
- Change from January 2011: 20%
Value of loans £m:
- January 2012: 3,600
- Change from December 2011: -23%
- Change from January 2011: 16%
Average loan to value:
- January 2012: 70%
- Change from December 2011: 70%
- Change from January 2011: 67%
Average income multiple:
- January 2012: 2.92
- Change from December 2011: 2.95
- Change from January 2011: 2.87
Proportion of income spent on interest payments:
- January 2012: 9.6%
- Change from December 2011: 9.5%
- Change from January 2011: 9.7%
For the last year, first-time buyers have borrowed on average 80% of their property and that was unchanged for January. The typical home mover borrowed 70% for the fourth month running.
First-time buyers continue to pay less of their income on mortgage interest, 12.2%, down from 12.3% in December. But as our recent article, To buy or not to buy, explained, in addition to interest payments, deposit and capital repayments form a large part of the payment burden for potential first-time buyers.
Director general of the CML, Paul Smee said:
"We traditionally see a substantial fall in lending figures at the start of the year, reflecting the lack of enthusiasm by buyers to move house during the post-Christmas months, and this January has been no exception. But the year-on-year rise in house purchase lending suggests that lending levels are generally rising although we expect the trajectory to be bumpy rather than smooth this year.
"Average deposits for first-time buyers have stayed steady at around 20% for over a year but that figure may start to drift down gently over the coming months especially as NewBuy has been launched for new homes."
Paul Hunt, managing director of Phoebus Software said:
“The month on month fall in first time buyer lending might seem worrying, but the real story lies in the sizeable annual rise. Monthly changes are dictated predominantly by seasonal change, so property buyers and anyone interested in the health of the mortgage and property markets must take great encouragement from these figures.
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