The Council of Mortgage Lenders has published it’s latest home buying figures which indicate that home buying activity up 7% in February. Looking on a seasonally adjusted basis, first-time buyer and home mover activity increased by value month-on-month and year-on-year. Buy-to-let house purchase and remortgage activity remained unchanged by volume and by value month-on-month, but decreased compared to February last year 44% by value and 42% by volume.

Key statistics from the report also included:

  • Home buyers borrowed £8.9bn, up 6% on January and 2% on February 2016. This came to 48,600 loans, up 7% on January and 2% on February 2016.
  • First-time buyers borrowed £3.8bn for home-owner house purchase, up 6% on January and 12% on February 2016. They took out 24,200 loans, up 7% month-on-month and 11% year-on-year.
  • Home movers borrowed £5.1bn, up 6% on January but down 4% year-on-year. This equated to 24,400 loans, up 6% month-on-month but down 6% compared to February 2016.
  • Home-owner remortgage activity was down 26% by value and 23% by volume on January. Compared to February 2016, remortgage lending was up 8% by value and 9% by volume.
  • Gross buy-to-let saw month-on-month decreases, down 13% by value and 12% by volume. Compared to February 2016, the number of loans decreased 26% and the amount borrowed decreased by 13%.

Paul Smee, director general of the CML, commented “Seasonal factors traditionally keep the market quieter in winter months, but 2017 began relatively strong on the house purchase side. Borrowers took out more loans to purchase a home in the first two months of 2017 than any year since 2007. This is down to strong first-time buyer activity which has consistently matched home mover borrowing over the past six months, a trend not seen in the UK for 20 years. House purchase activity on the buy-to-let lending side remains weak. This trend is expected to continue because of the tax changes from April and because lenders are tightening affordability criteria in response to PRA-mandated stress tests.”

There were more loans advanced for house purchase in the February month than any February since 2007, although due to the seasonal dip in activity,  borrowing was relatively low compared to monthly activity the past twelve months.

The proportion of household income used to service capital and interest rates continued to be near historic lows this month for both first-time buyers and home movers at 17.4% and 17.6% respectively.

Affordability metrics for first-time buyers saw the typical loan size decrease slightly from £132,300 in January to £132,100 in February. The average household income also decreased to £40,000 from £40,200. This meant the income multiple went from 3.53 to 3.54.

The average amount borrowed by home movers in the UK increased to £176,000 from £175,300 the previous month, while the average home mover household income increased slightly month-on-month from £54,900 to £55,000. The income multiple for the average home mover was unchanged at 3.34.

Chart 1: Number of loans to home-owners, 2007-2016

20170411 February 2017 MLT chart one

Source: CML Regulated Mortgage Survey

Buy-to-let lending in February

Buy-to-let activity was driven by buy-to-let remortgage lending which accounted for over two thirds of total lending. The number of loans for buy-to-let house purchase advanced in February was at a ten month low in part due to the traditional seasonal dip in activity in the winter months.

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

20170411 February 2017 MLT chart two

Source: CML Economics (pre-2013 data based on quarterly data)

Table 1: Number of loans for house purchase and remortgage in February

House purchase Remortgage
FTBs Movers Buy-to-let Home owners Buy-to-let
February 2016 21,800 25,900 10,300 28,500 13,200
January 2017 22,600 23,000  5,900 40,200 13,900
February 2017 24,200 24,400  5,700 31,000 11,600
1 month change +7.1% +6.1% -3.4% -22.9% -16.5%
12 month change +11.0% -5.8% -44.7% +8.8% -12.1%

Table 2: Value of loans for house purchase and remortgage in February

House purchase (£m) Remortgage (£m)
FTBs Movers Buy-to-let Home owners Buy-to-let
February 2016 3,400 5,300 1,500 4,800 2,200
January 2017 3,600 4,800 800 7,000 2,200
February 2017 3,800 5,100 800 5,200 1,900
1 month change  +5.6% +6.3%  0.0% -25.7% -13.6%
12 month change  +11.8%  -3.8%  -46.7%  +8.3%  -13.6%