The number of loans for home-owner house purchase in the first quarter of 2014 decreased by 16% in comparison to quarter four of 2013, but was up 27% compared to quarter one 2013.
Overall, lending for home-owner house purchase increased in March with a total of 50,500 loans advanced in the month. This was up 4% compared to February and a 17% increase compared to March last year. The value of new loans to home-owners for house purchase was £8bn, up 3% on February and 27% compared to March last year.
On a quarterly basis, there were 147,800 loans advanced in the first three months of 2014, down 16% compared to the fourth quarter of 2013 due to the usual seasonal dip at this time of year. The new loans were 27% up on the first quarter of 2013.
The number of loans to home movers totalled 26,100 in March, unchanged from February but up 11% compared to March last year. The value of these loans totalled £4.6bn, a decrease of 2% on February but up 18% compared to March 2013.
Overall for the first quarter of 2014, home movers took out 79,000 loans, with a value of £14.2bn. This was 19% fewer, and 16% less by value, than in the fourth quarter of 2013. However, compared with the first quarter of 2013, this was a rise of 20% by volume and 30% by value.
Paul Smee, director general of the CML, commented:
“All types of lending show positive year-on-year growth but the rate of increase is not as frenetic as at the end of 2013. Buy-to-let lending continues to recover and regain market share.
"The FCA's new regulation of mortgages has now been introduced, but it will still be some time until we can assess its effect on the market. The industry was ready for the transition, and already actively implementing many of the changes prior to April. We do not anticipate prolonged disruption to the market as a consequence. But we still see affordability constraints as an important factor in determining the level of demand for mortgages which we see over the next year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says:
"The lending market continues to strengthen albeit not at the frenetic pace seen at the end of last year. The combination of cheap finance and lenders with a real appetite to lend shows no signs of diminishing.
"It is too early to say what impact the MMR will have but it will ensure that affordability is not compromised as house prices continue to rise. Even if borrowers do lack prudence and want to overburden themselves with a mortgage that they will struggle to pay when interest rates rise, the new rules mean they simply can't.
"With the economic recovery continuing apace - unemployment falling, wages rising and inflation edging off further - the markets have been anticipating an early interest rate rise. However, the Bank of England has dampened speculation that interest rates will rise soon with Governor Mark Carney declaring that they will remain low 'for some time'.
"Mortgage rates remain extremely competitive, particularly fixed rates, and there is increasing choice available to first-time buyers. This, combined with Help to Buy, is responsible for the continued surge in their numbers, which is great news for the overall health of the housing market."
Alan Cleary, Managing Director of Precise Mortgages comments:
“Amidst recent speculation about the state of the housing market, a further increase in the number of first time buyers comes as welcome news.
“With the labour market bolstered and signs of all round economic improvement across the UK, these optimistic figures from the CML further cement the view that the property market is thriving too. Despite this, in recent weeks we’ve heard of new fears that the bubble could burst, not to mention a magnitude of hearsay surrounding the Mortgage Market Review’s impact. These new affordability measures have led to a heavy focus on financial minutiae including expenditure on meals out, haircuts, gym memberships and such like.
“In reality, we know lenders are unlikely to delve this deep. Although we really don’t expect the majority of lenders to conduct the new affordability checks any differently, we may well see evidence of borrowers shying away through fears of stringent checks and an unstable market in next month’s figures.”
