Mortgage lending strengthened in August

UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier:

First-time buyers borrowed £5.7 billion, 16 per cent more than in July and 12 per cent more than in August 2016. They took out 34,400 mortgages, 14 per cent up on the preceding month and nine per cent more year-on-year.
Home movers borrowed £8.4 billion, 18 per cent more than in July and 20 per cent more than in August last year. This equated to 38,500 loans, up 17 per cent on July and 13 per cent on August 2016.
Remortgaging by home owners totalled £6.4 billion, four per cent less than in July but eight per cent more than in August 2016. The number of people remortgaging totalled 36,700, down one per cent on July but five per cent higher than a year ago.
Buy-to-let lending totalled £3.1 billion, down three per cent on July 2017 and the same as in August last year. This equated to 20,400 mortgages, the same as in July but four per cent more than in August last year.

Commenting on the data, UK Finance’s Head of Mortgages Policy June Deasy said:

“Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in stamp duty. Over the last 12 months, the number of people remortaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.”

Home-owner house purchase and remortgage lending in August 2017

On a seasonally adjusted basis, borrowing by first-time buyers and movers increased by both value and volume. There was a decline in both the number of people remortgaging and the value of lending. The value of buy-to-let lending was unchanged but there was a small decrease in the number of buy-to-let borrowers remortgaging. (The full seasonally and non-seasonally adjusted data can be downloaded at the bottom of the page.)

The proportion of household income taken up by mortgage payments edged up for first-time buyers (17.5 per cent) but was unchanged for movers (17.6 per cent). Overall, it remains low by historical standards.

The average amount borrowed by a first-time buyer increased from £138,999 in July 2017 to £140,035. There was a smaller proportionate increase in the average first-time buyer household income, and the average income multiple increased from 3.60 to 3.63. The average amount borrowed by movers increased from £180,000 to £182,750, and their average income multiple increased from 3.38 to 3.40.

Chart 1: Number of loans to home owners, 2007-17

Buy-to-let lending in August

Remortgaging accounted for more than two-thirds (68 per cent) of buy-to-let lending in August. Buy-to-let remortgaging was five per cent lower than in July, but borrowing for house purchase increased by 11 per cent. Overall, however, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher stamp duty rate in the spring of 2016.

Chart 2: Number of loans for buy-to-let

Table 1 – Number of loans for house purchase and remortgage

	House purchase			Remortgage
	FTBs	Movers	Buy-to-let	Home owners	Buy-to-let
August 2016	31,600	34,100	6,500	35,000	12,900
July 2017	30,300	32,900	6,400	37,100	13,700
August 2017	34,400	38,500	6,800	36,700	13,100
1-month change	13.5%	17.0%	6.3%	-1.1%	-4.4%
12-month change	8.9%	12.9%	4.6%	4.9%	1.6%

Table 2 – Value of loans for house purchase and remortgage

	House purchase			Remortgage
	FTBs	Movers	Buy-to-let	Home owners	Buy-to-let
August 2016	5,100	7,000	1,000	5,900	2,100
July 2017	4,900	7,100	900	6,700	2,200
August 2017	5,700	8,400	1,000	6,400	2,100
1-month change	16.3%	18.3%	11.1%	-4.5%	-4.5%
12-month change	11.8%	20.0%	0.0%	8.5%	0.0%

Table 3 – First-time buyer affordability measures

	Loan size (£)	Income (£)	Loan-to-value	Loan-to-income	Interest payment as % of income	Capital and interest payment as % of income
August 2016	136,500	40,996	85.0%	3.56	9.3%	18.0%
July 2017	138,999	40,995	85.0%	3.60	8.3%	17.4%
August 2017	140,035	41,254	85.0%	3.63	8.2%	17.5%

Table 4 – Home-mover affordability measures

	Loan size (£)	Income (£)	Loan-to-value	Loan-to-income	Interest payment as % of income	Capital and interest payment as % of income
August 2016	175,000	55,457	71.2%	3.27	7.1%	17.9%
July 2017	180,000	55,825	72.2%	3.38	6.5%	17.6%
August 2017	182,750	56,087	72.0%	3.40	6.4%	17.6%