Key points that have emerged in the data included that several of the numbers have reached record levels since the series began, and that lending to first time buyers increased £1.9bn over the past year. The overall value of the residential loan amounts outstanding was £1,330 billion in Q2 2013, an increase of 0.1% compared with Q1.
Gross advances of £41.6 billion in Q2 were 23% higher than in Q1 – an upward movement usual in the second quarter of the year, but also 13% higher compared with the same quarter in 2012. The increase of 23% compared with Q1 this year is the highest percentage increase between Q1 and Q2 in any year since the series began in 2007.
Net advances in Q2 2013 amounted to £5.1 billion, 8.6% higher compared with Q2 2012. There was a 19.3% increase in the value of new commitments to £47.5 billion when compared with Q2 2012 – the largest quarterly amount of new commitments since Q3 2008. The overall average interest rate on gross advances decreased from 3.65% in Q1 2013 to 3.47% in Q2 2013, the lowest interest rate recorded since the series began.
Lending for house purchase accounted for 65.0% of new advances, while the proportion of advances for re-mortgages fell back in Q2 to 28.3%. The amount advanced to FTBs increased by £1.9 billion over the past year to £8.0 billion, an increase of 31%. There was a large increase in the value of new lending for buy to let over the past year – up from £3.9 billion advanced in Q2 2012 to £5.0 billion in Q2 2013.
High LTV lending was also up, with the proportion of gross advances at a high LTV (i.e. over 90%) increased from 2.1% in Q1 2013 to 2.5% in Q2 2013. Overall, the proportion of new lending done with both high LTV and high income multiple increased to 1.6%, a level last recorded in 2009.
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"As expected, the volume of gross advances in the second quarter rose but the increase was the greatest seen since records began six years ago. Funding for Lending and Help to Buy are resulting in cheaper mortgage rates, which is encouraging borrowers to finally take the plunge. Growing confidence in the housing market as prices rise, particularly in London and the south-east, is also stoking the market.
"More borrowers are opting for fixed rates which is no surprise when you consider just how cheap they are. However, while there is potential for further reductions the likelihood of rates rising is higher so borrowers should consider moving now, rather than waiting for already historically low rates to fall further still.
"More first-time buyers are returning to the market, with a small increase in those borrowing more than 90 per cent LTV. With the Help to Buy scheme guaranteeing loans for buyers with modest deposits, we expect this trend to continue. While George Osborne has stated that high loan-to-value mortgages are not 'exotic weapons of mass destruction', borrowers must still ensure that they can afford a high LTV mortgage before taking the plunge."
