Mortgage lending rises by 19%

Mortgage 23

Mortgage lending in the UK has increased by almost a fifth over the past year, the latest industry data reveals.

Figures compiled by the Council of Mortgage Lenders (CML) show that home buyers borrowed £9.6 billion in April 2017 - a 19 per cent increase on April 2016, when the total stood at £8.1 billion.

In total, 51,200 home loans were taken out; a nine per cent rise on April 2016, when 46,800 loans were taken out for property purchases.

FTB borrowing

Within these totals, first-time buyers (FTBs) borrowed £4.1 billion, which is up eight per cent year-on-year. FTBs took out 25,400 loans, which is a two per cent increase when compared with April 2016.

Existing homeowners borrowed £5.5 billion in order to move into new homes, which is up 28 per cent year-on-year. This equated to 25,700 loans; a 17 per cent rise compared with the same period last year.

A reduction was seen in homeowner remortgage activity, which was down 15 per cent by value and 16 per cent by volume year-on-year.

Attractive offers

A key factor in homeowners and buyers taking out new deals is the attractive mortgage offers first launched last year but maintaining momentum into 2017, with some historic low rates across a range of terms.

On a seasonally adjusted basis, loans taken out by FTBs and home movers went up by value and remained relatively unchanged by volume compared to March. Buy-to-let and remortgage activity also remained relatively unchanged month-on-month.

The data also revealed that the proportion of household income that is used to service capital and interest rates continued to be near historic lows in April.

For first-time buyers, the proportion stands at 17.3 per cent, while for home movers it is 17.5 per cent.

Affordability rising

The study’s affordability metrics for first-time buyers saw the typical loan size rise from £133,500 in March to £136,500 in April, while the average household income increased to £40,700 from £40,000.

The average amount borrowed by home movers in the UK increased to £176,500 compared to £172,400 the previous month, while the average home mover household income increased month-on-month from £54,100 to £55,200.

Paul Smee, director general of the CML, noted that the seasonally-adjusted picture shows lending is relatively unchanged month-on-month across all segments.

He added: “Heading into the summer months, we expect the market to remain slightly lopsided, but both first-time buyer and remortgage lending should maintain momentum on the coattails of the attractive deals available.”

More deals available

It comes after data compiled by Moneyfacts for its UK Mortgage Trends Treasury Report revealed that more mortgage deals were available to UK homeowners and buyers in May than at any point in the past nine years.

The report showed that 4,460 products were available; an increase of 849 over the past 12 months, and a 119 increase between April and May alone.

Overall, it was the highest total seen since March 2008, when 6,192 such products were available, with a key reason being the increasing competition between lenders and record-breaking low-rate deals on offer.

Use our mortgage calculator, created with the Mortgage Advice Bureau, to work out the best deal for you.