As previously reported, gross mortgage lending reached £13.6 billion in February. This represents an 8% decrease from January’s gross lending total and 8% lower than lending in February 2014.
Home-owner house purchase lending declined in February both compared to the previous month and February 2014. The number of loans advanced totalled 40,600, down 1% on January and 16% compared to the same month in 2014. These loans totalled £6.8bn, which was down 3% on January and 13% on February last year.
There were 18,700 loans advanced to first-time buyers - down 1% on January and 16% compared to February 2014. Home movers were advanced 21,900 loans, a decline of 2% compared to January and 16% down year-on-year. Remortgage lending decreased month-on-month with 21,500 loans advanced - down 16% on January and 14% down on February 2014. There were 15,900 buy-to-let loans in February - down 13% on the previous month but up 11% on the same period in 2014.
Home movers affordability changed slightly month-on-month, with borrowers typically being advanced a mortgage loan 3.03 times their gross income in February, only a slight change compared to 3.02 in January. The typical loan size for home movers was £155,530 in February, up from £155,000 in January. The typical gross household income of a home mover was £54,000 in February, which was up from £53,612 in January.
Home movers' payment burden remained relatively low in February at 18.3% of gross income being spent to cover monthly capital and interest payments, down from 18.5% in January, and well below the recent peak of 23.8% in December 2007.
Paul Smee, director general of the CML, commented:
"As with January, seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months. Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.
"We this month launched the CML buy-to-let statement of practice which reflects what responsible lenders already do and offers a clear explanation of how buy-to-let lenders operate. We hope it will help in people's understanding of the buy-to-let lending environment and the transparency of the statement of practice can give confidence to landlords that clear and consistent lending policies are being undertaken."
Richard Pike, Phoebus Software sales and marketing director, said:
“Today’s figures from the CML indicate that the MMR is probably still having an impact on people’s ability to get a mortgage. The double edged sword of affordability checks and stricter criteria are having the effect of many lenders still not willing to lend on mass, albeit we are now seeing the return of some near prime for the right cases which is a definite market requirement following the credit crisis. The pre-MMR spike in lending last year has been made even more evident now that we see a 16% drop in lending year on year. ”
Danny Waters, Chief Executive Officer of Enterprise Finance, said:
“The latest CML figures show that, following January’s unconvincing start to the year, the malaise affecting the mainstream mortgage market has extended into February. That homeowner purchase, first-time buyer and home mover activity is down on February last year is rational given the strong start to 2014, but it is more of a concern that all three indicators decreased on a monthly basis, too. Hopefully, this is just a case of pre-election jitters and not anything more widespread.
“The only saving grace for the mortgage market at present is the buy-to-let sector which has recorded a solid annual improvement, but even that hasn’t been immune to a month-on-month dampening.
“It may well be the case that the current picture is maintained until the election and we then see a strong second half to the year as the uncertainty disappears, creating the reverse pattern of what we saw in 2014.”
