First-time buyers saw the first month-on-month lending decline since January this year, with 28,900 first-time buyer loans in August - 4% fewer than in July, but still 9% up on August 2013. By value, there was £4.4 billion of lending to first-time buyers in August - 4% down on July but 22% higher than August last year.
The typical loan size for first-time buyers also fell slightly month-on-month to £126,198 in August, down from £127,500 in July. The typical gross income of a first-time buyer household changed slightly £38,649 in August from £38,866 in July.
First-time buyers in August paid 19.7% of gross income towards covering capital and interest payments, little changed from 19.6% in July and still significantly less than the recent peak of 24.8% in December 2007.
Paul Smee, director general of the CML, commented:
“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, with remortgaging remaining flat. 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."
Paul Hunt, Phoebus Software managing director, said:
“Although lending in August was down on the previous month, the question is ‘is it the usual seasonal dip’ or is there some underlying reason? The answer I believe will make itself known in the coming months, but for now this is the first real drop in lending since February this year and it’s a little too early to press the panic button just yet. The fact that we’ve seen the highest level in purchase lending since 2007 speaks well for the future and I believe that as the market continues to adjust to the changing regulatory scene, and fears of early interest rate rises abate, the market will continue on its current path towards the end of the year.”
