First-time buyers took out 6,600 more loans in April than a year ago

New Council of Mortgage Lenders data released today on the profile of UK lending in April 2014, including first-time buyer, home mover, re-mortgagor and buy-to-let lending, shows:

• The number of loans to first-time buyers rose by only 1% in April compared to March, but was 37% higher than in April 2013. By value, lending to first-time buyers was up 3% on March and 52% higher than in April last year. 
• The number of loans to home movers increased in April by 11%, with the value up 15% compared to March. Compared with April 2013, growth was up 30% by volume and 47% in value.
• Total number of loans for home-owner house purchase (first-time buyers and home movers) increased month-on-month by 6% and 11% by value on March, with year-on-year growth in number of loans up 33% and 47% by value.
• Total number of loans for re-mortgage in April was up 6% and 11% by value compared to March. 
• Total number of buy-to-let loans declined slightly month-on-month down 1% in April but the value remained unchanged. Compared to April 2013, there was a 43% increase in number of loans and a 57% increase in overall value.     

The Bank of England reported earlier this month gross UK mortgage lending was £16.5 billion in April, an 8% increase compared to March and 35% higher than the total of £12.2 billion in April last year. 

Lending for home-owner house purchase

Home-owner house purchase lending in April increased month-on-month as lending continued to recover from the usual seasonal dip seen at the beginning of the year. In total, 53,200 loans were advanced for house purchase, up 6% compared to March, and the value of these loans totalled £8.8bn, a rise of 11% on March.

Compared to April 2013, the number of loans increased by 33% and the value of lending by 47%.  

Chart 1: Number of loans for home-owner house purchase per month

 

Source: Council of Mortgage Lenders

Table 1: Loans for home-owner house purchase and re-mortgage

	Number of housepurchase loans	Value of house purchase loans, £m	Number of remortgage loans	Value of remortgageloans, £m
April 2014	53,200	8,800	26,300	4,000
Change from March 2014	6.2%	11.4%	6.0%	11.1%
Change from April 2013	33.0%	46.7%	0.0%	17.6%

Lending to first-time buyers

       First-time buyers took out 24,500 loans in April, up only slightly by 1% compared to March but 37% more than in April 2013. The total value of these loans was £3.5bn, which was up 3% on March and 52% on April last year. 


 

First-time buyer affordability worsened fractionally, with first-time buyers typically borrowing 3.42 times their gross income, compared to 3.41 in March. The typical loan size for first-time buyers was £121,500 in April, up from £118,750 in March and represents the highest monthly average advance for first-time buyers on record. In parallel to this, the typical income of a first-time buyer household increased to £37,000, up from £35,704 in March, which was also the highest average income on record. 

The relatively low level of interest rates means borrowers' payment burden remains relatively low at 19.4% of gross income being spent to cover capital and interest payments, up from 19.2% in March and 19.1% in April 2013. 

Chart 2: Number of loans advanced to first-time buyers per month

 

Source: Council of Mortgage Lenders

Table 2: First-time buyers, lending and affordability

	Number of loans	Value of loans £m	Average loan to value	Average income multiple	Proportion of income spent on interest payments	Proportion of income spent on capital and interest payments
April 2014	24,500	3,500	83%	3.42	11.6%	19.4%
Change from March 2014	1.2%	2.9%	80%	3.41	11.1%	19.2%
Change from April 2013	36.9%	52.2%	81%	3.26	12.1%	19.1%

Lending to home movers

The number of loans advanced to home movers for house purchase totalled 28,700 in April, up 11% compared to March and 30% compared to April 2013. Home mover loans totalled £5.3bn in value in April, which was up 15% on March and up 47% on April last year.   

Chart 3: The number of loans advanced to home movers per month

 

Source: CML

Table 3: Home movers, lending and affordability

	Number of loans	Value of loans £m	Average loan to value	Average income multiple	Proportion of income spent on interest payments	Proportion of income spent on capital and interest payments
April 2014	28,700	5,300	72%	3.03	8.8%	18.6%
Change from March 2014	10.8%	15.2%	73%	3.04	8.7%	18.6%
Change from April 2013	29.9%	47.2%	70%	2.87	9.2%	18.3%

Lending to home owners for remortgage

Home-owner remortgage activity in April totalled 26,300 remortgage loans advanced in the period. Unlike house purchase loans, the number of remortgage loans did not show an increase, but remained unchanged, in April compared to April 2013. However, it was 6% higher than in March. These loans totalled £4bn in value, an increase of 11% month-on-month and up 18% compared to April 2013. 

Chart 4: Number of loans advanced for remortgage per month

 

Source: CML

Lending for buy-to-let

Buy-to-let lending in April totalled £2.2bn, representing 16,200 loans. This was virtually identical to March, but up 43% by volume and 57% by value compared to April last year.

Within the overall total of buy-to-let loans, 8,400 were for house purchase and 7,600 for remortgage. The total number of buy-to-let house purchase loans was up 3% compared to March and up 49% compared to April last year. The loans totalled £1bn in value, up 2% month-on-month and up 61% on April last year.  

The number of remortgage loans was 6% lower than in March, but up 38% on April last year. These loans had a total value of £1.2bn, up 3% on March and 60% compared to April last year. 

Chart 5: Number of buy-to-let loans advanced for house purchase and remortgage per month

 

Source: CML

Table 4: Loans for buy-to-let house purchase and remortgage

	Number of Gross BTL advances in period	Value of Gross BTL advances, £m	Number of BTL house purchase loans	Value of BTL house purchase loans, £m	Number of BTL  remortgage loans	Value of BTL remortgageloans, £m
April 2014	16,200	2,200	8,400	1,000	7,600	1,200
Change from March 2014	-1.2%	0.0%	2.9%	2.0%	-6.4%	2.6%
Change from April 2013	43.4%	57.1%	49.2%	61.3%	38.4%	60.0%

Paul Smee, director general of the CML, commented: 

“First-time buyers and home movers continue to be key drivers in the growth of the market and, despite fears that MMR preparations may hinder this momentum, we have seen a continued year-on-year upward trend every month in 2014. The UK picture continues to mask a disparate set of varied local conditions, but overall we expect lending levels to continue to build on the foundation of growth we have seen over the past 12 months." 

 

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey for all home-owner mortgage data. Buy-to-let data is sourced from a sample of CML members and has been grossed to estimate the industry total. The CML began collecting monthly data in January 2013 and will from now on report monthly buy-to-let data in this press releases, alongside our home owner house purchase data.  

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender.

4. The May 2014 data will be released on Thursday 10 July 2014.




http://www.cml.org.uk/cml/media/press/3938
 

New consumer protection guidance for the Lettings Industry

The Competition and Markets Authority (CMA) has today published new guidance for the lettings industry to improve their understanding and compliance with consumer protection law.
The follows a report last year by the Office of Fair Trading (OFT) which raised concerns about a number of unsatisfactory practises affecting tenants, including unfair and surprise fees and charges, poor service and delayed and substandard repairs.
The OFT concluded that greater compliance with existing legislation would improve consumer protection and practises in the lettings market.
The CMA worked closely with Trading Standards Services to agree how the law should be applied to the most problematic practises and to identify enforcement priorities, so that together they can tackle non-compliance and improve standards.
The guidance includes the following advice:

• Ensure that tenants and the lettings agent’s landlord clients know what charges and fees they will have to pay and what these are for.
• Avoid using misleading advertising or statements, and ensuring that the tenant or landlord is given all the information they need, at the appropriate time.
• Provide clear information which the tenant needs to know before they move in (such as guarantor and deposit requirements, and the terms and conditions of the tenancy agreement).
• Deal fairly and professionally with tenants and landlords, and using fair contractual terms.
• Ensure that services and repairs are carried out in a timely manner and with reasonable care and skill.
• Give clear and full information to tenants about how to end a tenancy agreement.

The above is to complement existing and emerging industry schemes and codes of conduct, and is relevant to lettings professionals in England, Wales, Scotland and Northern Ireland, highlighting national variations in legislation.
Nisha Arora, CMA Senior Director, Consumer, said: ‘Renting a property is a big financial commitment, and it is important that tenants can be confident that their landlord or letting agent will treat them fairly. This guidance will help lettings professionals understand how to comply with the law and should ultimately improve overall standards in the market.’

http://www.property118.com/new-consumer-protection-guidance-lettings-industry/66423/

How to double your money on a new-build

Matt Baker is a bit of a property addict with a portfolio spanning Spain and France but his most recent addition is a new house in Epsom. ‘I’ve always lived around here, in Cobham, Woking, Dorking,’ says Matt. ‘I hadn’t really thought about Epsom but when I saw this development, I knew it was unique.’

Thirty-three-year-old Matt owned a Surrey flat but was on the lookout for something bigger. He’d searched in vain until he discovered Crest Nicholson’s Noble Park. ‘Unlike many new homes, which are all crammed together,’ Matt explains, ‘these houses are on large plots surrounded by big trees. It makes such a difference.’

Last August, Matt paid £445,000 for a detached three-bed house, which he chose precisely because ‘it was the smallest house on the biggest plot’. He immediately extended the property to four bedrooms but he’s already called the builders back in and is now busily adding a fifth bedroom to the property. ‘I know I’ve gone against the norm,’ laughs Matt, ‘but then I generally do.’

Extending a new home is an unusual move, as plots are often too tight, but Matt’s tactic has paid off and he believes his five-bed house has already risen steeply in value. ‘I think it will be worth £750,000 by the time I’ve finished the work,’ he says. ‘You just don’t get large properties on big plots in Surrey for any less – they’re a rarity.’ When the whole development is finished in around three months’ time, Matt estimates his house could be worth £1 million.

‘I think I definitely bought at the right time,’ he says. ‘I got the right house and the right extension.’

Along with plot size, the finer details were impressive. ‘It was the little things,’ Matt says. ‘I love the sound system and the electric garage. It’s the little touches that make all the difference, they’re really cool.’

A sales director for an alcohol firm, Matt works mainly in London but sometimes travels. Noble Park’s location is perfect. It’s ten minutes to the M25, the A3 is within easy reach and Brighton is just 45 minutes away.

Matt bought his house off-plan and credits developer Crest Nicholson for being accommodating. ‘They probably won’t want me to say this,’ he says, ‘but they let me go there every week, so I could see what it was going to look like – and I changed a few things to get it exactly right.’

The Lowdown: Noble Park

Built on the site of an Edwardian hospital, only a handful of four-bedroom houses remain for sale at Noble Park. Situated near Epsom Common and Horton Country Park, Epsom’s iconic racecourse is just a short distance away. Ewell West and Epsom stations are nearby, with train journeys into London Waterloo taking around 35 minutes.

From £725,000.

http://metro.co.uk/2014/06/13/how-to-double-your-money-on-a-new-build-4759614/