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Cml April Figures - Lending Up On March But Lower Than April 2010

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Loans for house purchase increased in April, according to data released today from the Council of Mortgage Lenders. But, with Bank of England data showing a fall in house purchase approvals in April, there could be a lull in house purchase completions in the next few months.

There were 40,900 loans, worth £5.9 billion, advanced for house purchase in April, up from 37,900, worth £5.5 billion, in March and down from 41,900, worth £6 billion, a year earlier. While this is a further increase compared to earlier in the year, house purchase activity is still below the level seen in April last year.

Remortgage lending fell in April. 24,700 remortgage loans were advanced, worth £3 billion, compared to 34,100, worth £4.1 billion, in March. This is fractionally higher than April last year.

With remortgage activity currently linked to expectations of interest rate movements, future activity will be subdued as an imminent increase in the bank rate is now looking less likely. There was also a fall in remortgage approvals in April so remortgage completions are likely to remain modest in the coming months.

April 2011

Table 1: Loans for house purchase and remortgage

Number of house purchase loans 40,900

Value of house purchase loans £m 5,900

Number of remortgage loans 24,700

Value of remortgage loans, £m 3,000

The number of loans to first-time buyers increased by 8% in April, from 14,700 (worth £1.7 billion) in March to 15,800 (worth £1.9 billion). Loans were also up slightly from 15,700 (also worth £1.9 billion) in April 2010.

First-time buyers borrowed on average 80% of their property's purchase price in April, more than for most of the last two and a half years, but still well below the 90% that first-time buyers typically borrowed before 2008.

April 2011

Table 2: First-time buyers, lending and affordability

Number of loans 15,800

Value of loans £m 1,900

Average loan to value 80%

Average income multiple 3.13

Proportion of income spent on interest payments 13.3%

Mortgages to home movers also increased in April, with 25,100 advances, worth £4 billion. This is an increase of 8% (5% by value) compared to March, but, unlike lending to first-time buyers, a fall of 4% (2% by value) compared to a year ago.

Home movers have typically borrowed just below 70% of their home's purchase price since the middle of 2009 – in April it was 69%.

Table 3: Home movers, lending and affordability

Number of loans 25,100

Value of loans £m 4,000

Average loan to value 69%

Average income multiple 2.82

Proportion of income spent on interest payments 9.9%

For the second month running, in April 2011, only 4% of first-time buyers took out an interest-only mortgage. Before 2008, it was typical for around 30% of loans to first-time buyers to be on an interest-only basis. This shows here has been a clear shift away from interest-only mortgages, in particular for first-time buyers, since the financial crisis.

Michael Coogan, CML director general said:

"The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011. However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months."
Edited by koala_bear
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Some quick analysis on the numbers:

Avg. FTB property value £150,316 (£153,756 April 2010)

Avg. FTB Mortgage value £120,253 (£121,467 April 2010)

Avg. FTB income £38,400 (£37,259 April 2010) +3.1%

Prices static on the year but a change in mortgage criteria based on affordability i.e. cost of living has gone up so less money to pay a mortgage.

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