House purchase lending to home-buyers increased quarter-on-quarter in Northern Ireland totalling 3,500 loans, up 6% compared to the second quarter and the value of these loans totalled £350 million, a rise of 6% on the second quarter. Compared to the third quarter of 2013, the number of loans increased 30% and value of these loans increased by 46%. This is the highest quarterly house purchase lending level in Northern Ireland since the third quarter of 2007.
Alongside the previous quarter, the third quarter saw the highest first-time buyer lending volumes in Northern Ireland since 2006. First-time buyer affordability being favourable may account for this as they typically borrowed 2.73 times their gross income, considerably less than the UK average of 3.41.
The typical loan size for first-time buyers was £80,000 in the third quarter, unchanged from the previous quarter. The typical gross income of a first-time buyer household rose to £29,768 compared to £27,009 in the second quarter.
First-time buyer monthly payment burden decreased to 16.2% of gross income being spent to cover capital and interest payments in the third quarter, from 17.6% in the previous quarter, remaining lower than 19.6% in the UK overall.
In the third quarter of 2014, lending to home movers showed similar lending patterns in Northern Ireland to first-time buyers, and this quarter saw the highest home mover lending volumes since the last quarter of 2007 (the fourth quarter of 2009 was the only other period to have equally high volume levels). Home mover affordability may account for this as conditions have in general improved, with home movers typically borrowing 2.45 times their gross income compared to 2.50 in the second quarter but substantially less than 3.05 for the UK overall in the period.
The typical loan size for home movers was £103,500 in third quarter, down from £104,000 in the previous quarter. The typical gross household income for home movers was £44,000 in the third quarter compared to £41,241 in second quarter.
Home movers' payment burden remained low in Northern Ireland compared to the UK at 16.1% of gross income being spent to cover monthly capital and interest payments, slightly up from 15.9% in Q2 but less than the 18.8% UK average.
The number of loans advanced for remortgage in Northern Ireland saw decline quarter-on-quarter. Home-owner remortgage lending in the third quarter totalled 1,100 loans advanced in the period, which was a decrease of 15% on the second quarter and down 8% on the third quarter 2013. These loans totalled £110m in value, a decrease of 8% quarter-on-quarter and unchanged compared to Q3 2013.
Derek Wilson, chairman of CML Northern Ireland, commented:
“Northern Ireland saw higher house purchase lending growth year-on-year than the UK overall in the third quarter. The Northern Irish market in 2013 was really driven by first-time buyers but this year we have seen a resurgence of growth in home movers, suggesting it is becoming easier to transact. Borrowers are seeing good affordability conditions as the economy recovers, attractive rates are being offered by lenders, and there is further choice available through government schemes like Help to Buy.
"Two quarters have passed since the new FCA rules were introduced and they do not seem to have had any unintended consequences in the Northern Ireland market. This is not surprising given that house prices and the amount people borrow next to their household income is less than the UK average. The Northern Ireland market is open to those who aspire to be home-owners."
