The survey results published by the CML today show that this growth in July continued to be buoyed by home-owner house purchase lending, in particular by growth in first-time buyers.
The CML data (which, as of this month, includes buy-to-let) shows that total home-owner house purchase lending continued to grow, up 9% on June and 21% on July last year.
First-time buyers took out 25,300 loans in July, an increase of 5% on June and of 41% compared to July 2012, while home movers took out 32,000 loans, an increase of 12% compared to June and up 9% on July last year.
Home-owner remortgage lending continued to pick up compared to July 2012 and recent months, although the £3.8bn advanced remains subdued compared to historical volumes.
Total buy-to-let loans advanced increased to 15,200 in July, up 12% compared to June, and within this, 7,600 buy-to-let loans in July were for house purchase, up by 7% compared to June.
In contrast to the picture in the home-owner market, buy-to-let remortgage lending grew more strongly than house purchase, increasing by 24% compared to June to £1.1bn.
Paul Smee, director general of the CML, commented:
"The notable feature is the catch-up in home mover activity. For only the second time this year the monthly growth of movers exceeded the growth in first-time buyers. This is a positive sign of a mortgage market where obstacles to transactions are now reducing."
Ben Thompson, Managing Director, Legal & General Mortgage Club, comments:
"Another healthy rise reflects the steep jump in activity levels earlier in the year. First Time Buyers now feel as though they have a chance of buying a new home. This is in part due to a few more competitive rates, but moreover the ability to buy with a smaller deposit.
“The mover data looks a little healthier too. However, this segment of the population in many areas remains stuck, due to the triple whammy of Stamp Duty, tighter mortgage underwriting and reduced housing equity. We urge the Government to review Stamp Duty, as many homeowners need to move on, and we need more housing stock for FTBs to choose from. This is important as a more mobile housing market overall helps the UK economy.
“All eyes shortly will look towards remortgaging, and when this market will return. For many good reasons it won't return to anything like 2007 levels for a very long time, however some lenders will want to grow new lending more aggressively now the recovery is underway. Talk of rising interest rates will also stir some borrowers into action at some stage, even though base rate will remain stuck for quite some time yet."
George Spencer, chief executive officer of Rentify, the online lettings company, says:
"Landlord optimism is at its highest level in several years, thanks to strong rental yields, low mortgage rates and the general recovery in the housing market. Both experienced and novice investors alike are taking the plunge and expanding portfolios or getting into buy-to-let for the first time, while there is strong growth in buy-to-let remortgaging as existing landlords take advantage of ultra low rates. This also demonstrates that many are investing for the long term, which is good news for the sector.
"London remains incredibly popular for landlords, with investors increasingly choosing less well-known areas on the edge of more established ones in order to generate better returns.
"Accidental landlords, while still making up the majority of landlords, are increasingly taking advantage of improved market conditions and selling up. However, this presents a good opportunity for those landlords in a position to expand their portfolios.
"Because the recovery is coming from such a low base, we expect the buy-to-let market to continue to grow at an impressive rate in coming months. There has also been a big rise in the number of estate agent jobs in the past year, with many of these working in lettings. This clearly illustrates the extent of the housing boom but landlords and tenants alike should tread carefully and make sure any lettings agent they use is regulated. Even better, join one of the landlords doing it themselves: we are adding rental properties to our website at the rate of more than 400 a week and now have 140,000 landlords and tenants registered with us as both sides look for alternatives to traditional high-street letting agents."
Stephen Johnson, Managing Director, Commercial Mortgages, Shawbrook Bank, said:
“This morning’s announcement of the rise in buy-to-let lending is great news for the industry and Shawbrook is keen to support professional investors looking to take advantage of these market conditions. However, as an industry we must be careful to not create another bubble. At the moment lending conditions are very good but these are unusual times and the UK needs to create a sustainable market, not one lurching from peak to trough. Those looking to buy property need to ensure they look at the long term – investors need a portfolio that can still work in a more normalised interest rate environment. Sensible gearing will maximize returns, over-gearing now could potentially put at risk investors’ hard earned equity.”
