In this feature, we provide a broad overview of the mortgage market – essential reading for anyone looking to buy a property or operating commercially in the property market.
According to the Money Charity, outstanding secured (on dwellings) lending in the UK totalled £1.294 trillion at the end of September 2014. This is up from last September’s £1,271 billion and makes the average outstanding mortgage for the 11.1m households who currently have mortgages an estimated £116,035.
The Council of Mortgage Lenders reports that 58,600 loans were made for house purchase in September, worth £10 billion. This is lower than August’s in number by 7.0% and in value by 8.3%. However, these figures are up 13.1% and 20.5% (respectively) on last September’s figures.
Over the third quarter of 2014, gross lending totalled £32.4 billion, which is 13% higher than last quarter and 25% higher than Q3 2013. They numbered 188k – up 8% on Q2 and up 12% on last year.
The estimate for October is £19 billion – 5% higher than September’s and 8% higher than last October’s £17.5 billion.
26,800 loans worth £4 billion were made to first-time buyers in September. Compared to last month this is 3.2% fewer and 2.4% lower in value. However, this is 16% larger in number and 25% higher in value than last September
In Q3, 84,100 loans were made to first-time buyers, worth £12.5 billion, which is 3% higher in number and 7% higher in value on Q2. Compared to Q3 2013, the figures are up 15% and 24% respectively.
The UK’s average first-time buyer’s loan-to-value ratio is 83%, using 3.4 times income. The proportion of income paid out on interest is 12%, but this rises to 19.6% when including capital repayments.
In London in Q3, first-time buyer loans numbered 13,300 and were worth £3.3 billion. London’s first-time buyers borrowed 3.86 times gross income and the typical loan size was £221,997. 21% of their gross income goes towards capital and interest payments.
Welsh first-time buyers’ loan size is typically £100,800 – 3.23 times gross income. They spend 18.2% of gross income on capital and interest payments. There were 3,300 first-time buyer loans in Wales in Q3, worth £350 million.
Scottish first-time buyers spend 17.3% on capital and interest, typically using 2.94 times gross income to secure the £98,307 loan. There were 7,500 loans in Q3 worth £810 million.
In Northern Ireland, the number of loans to first-time buyers totalled 2,000 (worth £170 million. First-time buyers here borrow 2.73 times gross income, typically borrowing £80k. These buyers spend 16.2% of their gross income on capital and interest repayments.
Home-movers and re-mortgages:
For UK home-movers, the loan-to-value ratio in September was 70%, at 3.06 times income. Income proportion spent on interest was 9.1%, which rose to 18.8% when including capital repayments. There were 31,700 loans worth £6 billion this month. In Q3, home movers’ loans totalled £19.8 billion, and numbered 103,600.
The number and value of remortgage loans was 28,300 loans worth £4.4 billion in September. In Q3, the number of remortgage loans was 77,200, totaling £11.9 billion.
The September 2014 report shows that the total advanced on buy-to-let mortgages was £2.5 billion (18,100 loans).
Buy-to-let loans for remortgage numbered 9,260 loans worth £1.37 billion, whereas Buy-to-Let loans for house purchase totalled 8,760 worth £1.09 billion.
Mortgage Arrears and Homes Repossessions:
The number of UK mortgages in arrears now stands at 1.12% of all mortgages.
During Q3 2014, 125,100 mortgages were in arrears, i.e. behind by more than 2.5% of the mortgage balance.
The number of repossessions in the quarter was 5,000 (0.04%).
Source of data: Council of Mortgage Lenders and Money Charity