Loans to first-time buyers and home movers pick up in competitive mortgage market

Published : 13th December 2017


First-time buyers and home movers benefited from record low mortgage rates during October as approvals and the value of loans grew, lenders say.

Figures from trade body UK Finance show that first-time buyer mortgage approvals increased 3.6% between September and October to 31,700, up 10.5% annually.


First-time buyers borrowed £5.1bn, up 2% on the previous month and 13.3% higher than in October 2016.


Mortgage approvals for home movers increased 5% on a monthly basis and 15% annually to 33,000, equating to £7bn borrowed.


UK Finance said the increased borrowing was due to a more competitive mortgage market, allowing borrowers to take out bigger loans with lower repayments.


Combined capital and interest payments for first-time buyers as a percentage of household income remained stable at 17.2%, down 0.1 percentage points on September 2017 and down 0.4 percentage points compared with a year ago. The average loan to value (LTV) rose slightly, with an increase of 0.6 percentage points on September to 84.7%.


Home movers saw combined capital and interest payments remain stable at 17.5% of income, while the average LTV was also unchanged at 72.4%.


Gross buy-to-let lending for house purchase totalled £900m, unchanged on September 2017 and October 2016. That equated to 6,600 mortgages.


The market continued to be dominated by remortgaging activity, with approvals up 16.4% annually to 41,100.


Remortgages now make up 70% of all buy-to-let mortgages, up 21.5% annually in October to 14,700.


June Deasy, head of mortgage policy for UK Finance, said: “Over the past year, the number of loans for remortgaging have been at record levels, and this trend looks set to continue further as we head towards the end of 2017 and borrowers seek to take advantage of low interest rates.


“Mortgage repayments as a proportion of income still remain at or close to their historic low point, and despite the recent base rate rise we can expect monthly mortgage payments to remain affordable for the vast majority of borrowers.”


Commenting on the figures, John Phillips, Just Mortgages and Spicerhaart operations director, said: “Although the market has been propped up by the amount of remortgaging throughout 2017, there are encouraging signs for house buying too. The issue of supply and demand continues to weigh heavy on the overall market, but these figures show increases for home movers, first-time buyers and even buy-to-let purchasers in October.


“This shows a level of supply that has defied expectation. It may be because those people that have been waiting to see what happened to interest rates and Brexit negotiations decided to get on and do what was right for them, rather than waiting for what might be.


“Whether the winter months will prove to be as active is questionable, as many are still wary, preferring to sit and wait to see what will be.”