CML: FTB lending sees second monthly decline

New CML data on the characteristics of lending has shown that lending to FTBs fell slightly in September.

Related topics:  Mortgages
Rozi Jones
11th November 2014
ftb buyer mortgage keys adviser

First-time buyers saw a month-on-month lending decline for the second month in a row, with 26,800 first-time buyer loans in September - 3% fewer than in August, but still 16% up on September 2013. By value, there was £4 billion advanced to first-time buyers in September - 2% down on August but 25% higher than September last year.

First-time buyer affordability changed fractionally, with first-time buyers typically borrowing 3.40 times their gross income, compared to 3.42 in August. The typical loan size for first-time buyers rose month-on-month to £125,999 in September, up from £125,375 in August. The typical gross income of a first-time buyer household changed slightly to £38,690 in September from £38,185 in August.

In the third quarter of 2014, first-time buyers borrowed on average £125,875, up from 122,000 in the second quarter of the year. They typically borrowed 3.41 times their income, down from 3.46 in the second quarter of 2014. The average household income of first-time buyers increased to £38,420 in the period, up from £36,750 in the second quarter of 2014.   

First-time buyers in September paid 19.6% of gross income towards covering capital and interest payments, little changed from 19.7% in August but still significantly less than the recent peak of 24.8% in December 2007.

Paul Smee, director general of the CML, commented:

“We are approaching the end of twelve months of change, transition and growth. This has been a year when lenders and intermediaries have been put under increased spotlight from regulatory, political and media spheres and have risen to meet the challenges. The lending market is healthier than it was a year ago, and set to remain so. Remortgaging has returned as a driver of lending volume in the buy-to-let sector. But any fears of over-heating in the housing market are now dissipating as house purchase lending activity seems to be softening.”

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