Total gross lending in June grew by 6% on the month to £17.9 billion (20% up on June last year), according to the Bank of England. In the quarter, gross lending totalled £51.4 billion - up 11% on the first quarter, and 23% on the second quarter of 2014.
At 91,000 loans, there were 16% more home-mover loans in the second quarter than the first, and 15% more than in Q2 2013. On a quarterly basis, the value of home-mover lending was £11.3 billion, up 19% on the first quarter and 27% up on the second quarter 2013.
House purchase lending to home-buyers increased month-on-month in June totalling 60,500 loans, up 5% compared to May and the value of these loans totalled £10bn, a rise of 6% on May. Compared to June 2013, the number of loans increased by 15% and the value of lending by 23%.
In the second quarter of 2014, home-owner house purchase lending saw quarter-on-quarter and year-on-year growth. Number of loans advanced in this period totalled 171,000, an increase of 17% on the first quarter of 2014 and up 19% on the second quarter of 2013. These loans totalled in value £28.2bn, up 19% on the first quarter and up 29% on the second quarter of 2013.
In the second quarter of 2014, lending to home movers showed similar, albeit slightly lower, growth patterns to first-time buyer lending.
Home mover affordability changed fractionally, with home movers typically borrowing 3.09 times their gross income, compared to 3.10 in May. The typical loan size for home movers was £154,000 in June, up from £150,000 in May. The typical gross household income of a home mover was £52,000 in June compared to £50,600 in May.
Home movers' payment burden remained relatively low in June at 18.7% of gross income being spent to cover monthly capital and interest payments, up slightly from 18.7% in May.
While new regulatory rules came into effect in the second quarter of 2014, home movers characteristics changed only marginally within this period. Home movers borrowed on average £151,000, up from £147,000 in the first quarter of the year. They typically borrowed 3.09 times their income, up slightly from 3.05 in the first quarter of 2014. The average household income of home movers increased to £51,300 in the period, up from £50,200 in the first quarter of 2013.
Paul Smee, director general of the CML, commented:
“For the second month running since new FCA rules took effect, lending characteristics remain similar to the market beforehand. We now feel confident that, as we would hope, the MMR effect is more gentle dampener than hard brake. As we recently suggested in our revised forecasts, lending levels should continue to increase modestly over the course of the year, driven mostly by house purchase but with remortgaging also recovering.”
David Brown, commercial director of LSL Property Services, comments:
“As the property market gains altitude, all systems are starting to tick over more normally. Big questions are now about speed and capacity for new homeowners.
“Moderating price rises are a sign of steadying confidence – the equivalent of winding down the engines after take-off. And recent flows of first-time buyers are a sign of making real headway. Sellers are finding quality buyers more quickly, and transactions volumes are growing.
“But to get the dream of homeownership truly airborne, we need more homes. Building levels are growing rapidly, and this will need to carry on indefinitely. If so, the house purchase market could one day see affordability improve consistently, as we’ve seen with the private rented sector. But in the meantime, below-inflation rent rises, thanks to solid buy-to-let activity, will be a vital alternative for millions of households.”
