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Home purchase lending remains strong rising by 5% in November

Home buyers borrowed £11 billion in November up over 5% on the month reflecting a stable market and aspirations for home ownership.

Research from the Council of Mortgage Lenders (CML) showed the number of loans from first time buyers and home movers were 60,800 in November increasing 5.3% for the month.

There were 30,100 first time buyers which is 7.9% higher than this time last year and borrowing of £4.7 billion is 9.3% higher than November 2015.

For home movers the number of mortgages of 30,700 is -6.4% lower than last year and by value they borrowed £6.3 billion or -4.5% lower than twelve months ago.

Aspirations for home ownership are strong

According to Paul Smee, director general of the CML 2016 did not match recent years in terms of house purchase lending growth although lending remained resilient and aspirations for home ownership remain strong in the UK.

Forecasts for 2017 are less bullish than a year ago as economic uncertainty weighs on the market, however, CML still predict 1.2 million transactions and higher gross lending to £248 billion, says Mr Smee.

The number of re-mortgage buyers remained the same as last month at 34,700 although this is 13.4% higher than this time a year ago.

The value of loans was £5.8 billion which is -4.9% lower month-on-month but 13.7% compared to the same figure in November 2015.

Lending to buy-to-let landlords was at the highest monthly level since the stamp duty changes on second properties introduced in April.

New purchase loans for buy-to-let were down -33.0% over a year at 6,700 but 8.1% higher for the month with re-mortgages 15.7% higher at 15,000 loans.

Mr Smee said, despite these strong results we expect buy-to-let lending levels in both 2016 and 2017 to prove lower than their 2015 recent peak as further tax changes take effect.

Affordability reaches historical low

According to the CML, the proportion of household income used to service capital and interest rates reached an historic low for both first-time buyers and home movers at 17.5%.

The affordability metrics for first-time buyers showed an increase in the size of mortgage from £133,400 in October to £134,200 in November.

Help for first time buyers can come from older homeowners as the equity release buyer can access wealth using a lifetime mortgage and give a child or grandchild the deposit on their first home.

Household income remained unchanged at £40,000 resulting in the income multiple went from 3.56 to 3.54 and loan to value figure increasing slightly over the year to 84.5%.

For a home mover, the average amount borrowed in the UK decreased to £171,000 in November from £172,000 in October, while the average home mover household income decreased slightly to £54,800.

The income multiple for the average home mover went from 3.26 to 3.27 with loan to value figure decreased slightly to 72.2%.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

Learn more by using the mortgage costs calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything or even benefit a family member.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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