"Mortgage affordability reached an historic low in September, for both first-time buyer and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut."
Affordability metrics for first-time buyers saw the typical loan size decrease to £133,000 in September from £136,400 in August, while the average household income also decreased slightly from £41,000 in August to £40,200.
The average amount borrowed by home movers in the UK also decreased to £171,000 in September from £175,000 in August, while the average home mover household income also decreased to £55,100 from £55,400.
While there was a decline in house purchase lending in September compared to the previous month, this is the highest volume of loans and most amount borrowed in the month of September since September 2007.
In total, homeowners borrowed £11.4bn for house purchase, down 7% month-on-month but up 4% year-on-year. They took out 62,900 loans, down 5% on August but up 3% on September 2015.
This was mirrored in first-time buyer lending which saw a decline month-on-month but a 14% increase year-on-year to hit the highest volume of loans in the month of September since 2006.
Remortgage loans saw a decline month-on-month but an increase year-on-year in September. On a quarterly basis, there were more loans advanced for remortgage than any quarter since the third quarter of 2011.
Paul Smee, director general of the CML, commented: "House purchase activity appears to have steadied, we may not be seeing huge increases in activity on the scale of 2013-14 but there is a consistency in the levels in recent months. Mortgage affordability reached an historic low in September, for both first-time buyer and home movers, which partly reflects the re-pricing of mortgages following August’s base rate cut. This should help turn strong appetite for home-ownership into a reality as we approach the closing months of the year."
David Copland, Director of TMA mortgage club, said: “Although mortgage lending has softened for consecutive months, the broader market remains strong. Lenders are cutting rates and continuing to lend, in order to boost people’s confidence in the housing market. Borrowers today have even more access to attractive remortgaging and home-mover products, with some fixed rate products on offer at as little as 1%."
Jeremy Duncombe, Director, Legal & General Mortgage Club, added: “It is encouraging to see that remortgaging figures are continuing to rise on an annual basis. These figures show that borrowers are beginning to regain control of the housing market and make it work for them, as they continue to take advantage of the record low base rate. Lending to first time buyers is following this trend set by remortgaging and is also continuing to rise year on year.
“Whilst month on month lending saw a slight dip across the board, it is important that we take a step back and look at the bigger picture. Both the amount home-buyers borrowed, and the number of loans they took out increased annually. The housing market is still plagued by an overwhelming supply-demand imbalance. The Government needs to tackle this fundamental flaw in our housing market head on by addressing the lack of supply."
