April sees 10% drop in house purchase lending

The latest report from CML has revealed that during April, gross lending reached £15.8bn, down from £16.1bn in March and £16.8bn in April last year.

Related topics:  Finance
Warren Lewis
16th June 2015

The number of loans for house purchase remained steady in April compared to March, but was down compared to a year ago.

On an annual basis, there was a fall across both first-time buyer numbers and home movers. On a monthly basis, the number of first-time buyers fell but the number of home-movers rose slightly.

The 12 month rolling sum of the number of first-time buyers has been above 300,000 since June 2014, though it has been gradually falling since October.

First-time buyer loan sizes have increased since a year ago, though their income has grown faster in proportion relative to loan sizes which has meant a fall in the typical loan-to-income ratio. Loan-to-value ratios have also fallen compared to a year ago, down to 82.1% from 84%.

Competitive mortgage rates mean first-time buyers are paying less to service their mortgage than any time since the CML began tracking it in 2005.

The average home mover loan size decreased in April compared to March, but increased compared to the same period last year. Average income increased in April, meaning loan-to-income decreased both month-on-month and year-on-year.

Remortgage activity among home-owners was down on the month and on the year. It has remained relatively subdued since around 2009.

Lending for buy-to-let in April saw a decline compared to March, but there was substantial growth compared to levels in April last year. This was largely due to the increased levels of remortgage activity in the buy-to-let sector seen since the beginning of the year.

While over the past year about 30% of lending to home-owners was for remortgage, in the buy-to-let market 52% of lending was for remortgage.

Paul Smee, director general of the CML, commented: "House purchase lending in April was relatively subdued compared to last year, but similar to activity in March. The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses.

Buy-to-let is showing stronger growth than home-owner lending, buoyed significantly by remortgaging, which continues to remain more subdued in the home-owner market."

More like this
Latest from Financial Reporter
Latest from Protection Reporter
to our newsletter

Join a community of over 20,000 landlords and property specialists and keep up-to-date with industry news and upcoming events via our newsletter.