Surge in residential mortgage lending as buy to let remains flat

New figures show a rise in mortgage lending to first time buyers and home movers in June.

Mortgage borrowing surged in June to a total of £13.7bn for both first time buyers and home movers according to data published today by UK Finance. This represents 76,500 loans and an increase of 26% more than in May on a non-seasonally adjusted basis.

First time buyers borrowed a total of £5.9bn, while home movers borrowed £7.8bn, increases of 9% and 15% respectively compared to June 2016.

The buy to let market, meanwhile, has remained relatively flat, with £2.9bn of total lending in June, compared to £2.8bn in May, representing a 5% increase in lending month-on-month and no change compared to June 2016.

Paul Smee, Head of Mortgages at UK Finance, commented:
“June’s figures show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year and an especially high number of loans for first time buyers. Buy-to-let activity remains subdued compared to its 2015 peak but consistent month-to-month since stamp duty changes in April 2016. But there are also signs of a softening market and we are not anticipating that this performance will be sustained in the second half of 2017. A slightly lop-sided market could well show some growth in house purchase lending but alongside reduced remortgage and buy-to-let activity.”

Average loan sizes for first-time buyers increased from £137,000 in May to £139,000 in June, while the average household income for these buyers decreased from £41,000 to £40,500, leading to an increase in income multiples from 3.58 to 3.59.

Average loans for home movers are also up, meanwhile, increasing to £180,000 from £177,000, and unlike first time buyers, average household incomes increased reaching £55,200 from £54,900 in May. The average home mover now has an income multiple of 3.39, up from 3.37 in May.

UK Finance is a new trade association. It replaces the Council of Mortgage Lenders which previously published mortgage lending data. The next data set for mortgage lending (July 2017) will be published on 12 September 2017.

 

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