CML: First-time buyer lending “healthy”

First-time buyer lending appears healthy, according to the Council of Mortgage Lenders (CML), which has described the mortgage market as “resilient and adaptable”.

Research from the organisation found that first-time buyers borrowed a total of £5.1 billion across 32,000 loans designated for home-owner house purchase in December 2017. This cash sum was up nine per cent on November, and 13 per cent on December 2015.

In addition, the average loan size granted to first-time buyers was found to have increased from £134,100 in November to £136,000 in December 2016.

It was noted that the increase in the size of loans from November to December 2016 could be related to the rise in the average household income of first-time buyers from one month to the next. In December, the average household income stood at £40,400, which was up on the previous month’s figure of £40,100.

Furthermore, in the fourth quarter of 2016, first-time buyers took out 90,800 loans, equating to £14.3 billion. This marked a one per cent decrease in both volume and value on quarter three. However, year-on-year, this showed a rise of four per cent in volume and seven per cent in value.

When it comes to home movers in the UK, the average amount borrowed increased from £170,900 in November 2016 to £175,000 in December. Meanwhile, the average home mover household income rose slightly from £54,800 to £55,000.

Lending in 2016

During 2016, home-owner remortgage activity rocket by 14 per cent in volume and 20 per cent in value when compared to 2015. This means the number of remortgage loans was at its highest since 2009.

Paul Smee, director general of the CML, said that 2016 had the potential to be a “destabilising” year of regulatory and political change, but had actually seen home-owner house purchase lending increase. He did note, however, that the buy-to-let sector’s positive lending performance had been primarily driven by remortgaging.

Looking to the future, he noted: “We do not expect the market volumes to show a year-on-year increase in 2017, instead [they should] remain similar to that achieved in 2016.”

By Amy White