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Mortgage lending falls by 9% with remortgage buyers leading the way

House purchase loans were 9% lower for the month of August according to the CML as remortgage buyers reducing by the largest amount.

The latest report from the Council of Mortgage Lenders (CML) shows the number of homeowner house purchases and remortgage buyers by value has reduced 9% from £21.6 billion in July to £19.7 billion in August.

House purchase by numbers totalled in August 62,300 compared to 68,700 in July. This was made up of 27,500 first time buyers and 34,800 home movers.

There were a further 25,600 remortgage buyers and 22,200 buy-to-let mortgages.

Even so this level of lending was the highest for the month of August for eight years and 10.7% up year on year although it remains 60% of what the value was in August 2007.

Largest fall for remortgage buyers

The number of remortgage buyers decreased by 17.2% month on month from 30,900 in July to 25,600 in August with a value of £4.2 billion. As a share of the total gross lending remortgages are now 21% reducing from 24% last month.

Over the year the numbers of homeowners remortgaging has increased by 11.3% and by value this has increased by 20.0% says the CML.

In contrast the number of buy-to-let mortgages has increased by a great amount of 37.9% from 16,100 last year to 22,200 this August. By value the increase is greater from £2.3 billion a year ago to £3.4 billion now, an increase of 47.8%.

According to CML, buy-to-let lending has been strong throughout the year ahead of residential loans in part due to the market recovering.

In the period 2007 to 2009 residential house purchases declined 50% whereas buy-to-let loans for house purchase declined 71% in the same period.

Best August for first time buyers since 2007

Even though the number of first time buyer mortgages reduced month on month by 10.4% from 30,700 in July to 27,500 in August, this was the highest August by volume and value for eight years but remains only 78% of what the value was in August 2007.

Loan to value (LTV) for first time buyers is currently 84.2% of the property value with an average mortgage of £128,999 and borrowing levels are 3.45 times their income.

In terms of the interest they pay on a mortgage, this is 10.0% of their gross household income which is on average £39,508.

To service capital and interest payments on their mortgage takes 18.5% of their income, but remained considerably lower than 19.7% in August last year.

For home movers the loan to value is lower at 71.9% of the property value with borrowing levels at 3.14 times income. The mortgage is higher at £168,750 and average household income is £55,891 although servicing the debt is similar at 18.1% of income.

For older homeowners there is higher activity with equity release buyers able to stay in their homes while accessing wealth in their property using a lifetime mortgage to help maintain their standard of living as costs rise.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or are a buy-to-let investor.

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

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to improve your quality of life or help your children start or expand a business.

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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