Remortgage activity gained some ground in April while house purchase lending edged down in April compared to March.
A total of £3.4 billion was advanced to borrowers remortgaging in April, up by 10% compared to March. There was still a 3% fall compared to April last year but the rate of fall has decreased over the past two months.
First-time buyers took out 19,400 loans (worth £2.5 billion) in April, down by 1% compared to March. Although year-on-year comparisons are distorted by the impact of the end of the stamp duty concession on lending in March and April last year, activity in the first four months of the year (70,700 loans) was 11% stronger than the same period last year (63,500 loans).
First-time buyers continued to account for an increased proportion of all house purchase loans. 46% of all house purchase loans in April were advanced to first-time buyers (unchanged from March) but considerably higher than the 38% average seen since 2007.
First-time buyers typically borrowed a slightly larger amount in April than in March. First-time borrowers typically borrowed 3.25 times their income, up marginally from 3.24 times in March. Despite the modest increase in loan size relative to income, first-time buyer mortgage payments took a slightly lower proportion of their income - 19.1% in April compared to 19.3% in March.
In April, the average loan-to-value ratio edged up to 81% which could be an indicator of higher loan-to-value mortgages feeding though to the average loan-to-value figure.
A total of 23,500 loans (worth £3.8 billion) were advanced to home movers in April, down by 1% (3% by value) compared to March but an increase of 4% (3% by value) compared to April last year.
House purchase activity was little changed in April, and like the underlying components - first-time buyer and home mover activity - the number of loans advanced edged down slightly.
While there was no change in the value of house purchase lending, the number of loans advanced dipped compared to March. A total of 42,600 house purchase loans (worth £6.3 billion) were advanced in April, compared to 43,000 loans in March. As with first-time buyers, comparisons with a year earlier are distorted by the end of the stamp duty concession, but if we compare the first four months of this year with the same period last year there was a 1% increase in house purchase activity.
Commenting on the data, CML director general Paul Smee said:
"Lending to first-time buyers remains above the levels seen at the same time last year, despite the boost caused by the end of the stamp duty holiday in March last year.
"The Help to Buy scheme announced in this year's Budget should provide a further boost to the first-time buyer and home mover markets, but we still await further details on how the initiatives will work."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"Growth in the housing market is steady rather than spectacular and certainly not back at the levels seen at the height of the housing boom. However, the situation continues to improve. Buyers are gaining confidence and Funding for Lending is resulting in cheaper mortgage rates. Critically, lenders are also loosening criteria which is making it easier for buyers to get a loan in the first place.
"There continues to be a welcome rise in the number of first-time buyers, with more lending being done at modestly higher loan-to-values. Help to Buy should help boost their number once the details have been ironed out.
"Remortgaging gained some ground in April but one would still expect to see more of this, given the rock-bottom mortgage rates now available. It may be that borrowers are sat on attractive reversion rates or standard variable rates so don't wish to remortgage, or are trapped because of tighter criteria or lack of equity in their homes so can't switch. There may also be borrowers holding out for even better rates. However, borrowers should look at rates in an historical context - these are the cheapest rates ever seen and even if they do edge a little lower, snapping one up now might be a good move. Don't assume they will be around for ever.
"The mortgage market is recovering. The continued availability of extremely competitive rates across the loan-to-value spectrum will help inspire confidence and should continue to boost the housing market."
Lea Karasavvas, Managing Director of the independent mortgage broker Prolific Mortgage Finance, comments:
"With the often mind-boggling rates on offer, it's no surprise that the remortgage market has started to fire. People are snapping up the highly competitive remortgage rates that are available.
"Rates have come down across the board and at high LTVs they are more competitive than they have ever been. The lower loan-to-value borrower no longer has a monopoly on low rates. Lenders have no choice but to price aggressively if they want to stay competitive. This is driving both remortgage and house purchase activity.
"While the number of first time buyers fell in April, the first four months of the year were much stronger relative to 2012. First time buyers have been the catalyst of the revival of the mortgage market and should continue to be for the foreseeable future. Crucially, the mortgage market today feels significantly more stable than it has for many years. There has been a revival in the market without it being 'irrationally exuberant'."
