First-time buyer activity helped drive lending in June
First-time buyer activity helped sustain lending for house purchase in June, according to data published by the Council of Mortgage Lenders.
The figures show that lending to first-time buyers during the month was at its highest since July 2010 - with the exception of March this year, when first-time buyer activity was boosted by the stamp duty concession.
First-time buyer purchases helped deliver an increase in lending for house-buying, but a contraction in remortgaging led to a decline in lending overall. Gross lending totalled £11.7 billion in June, 6% lower than May's total of £12.5 billion and 7% lower than in last June.
House purchase lending showed a modest increase in June, with 47,500 loans, worth £7.1 billion advanced (an increase on the preceding month of 2% by volume and 1% by value). Year-on-year, lending for house purchase was flat (down 1% by volume but up 1% by value). But there was a marked decline in remortgaging, perhaps driven by expectations that borrowing rates could fall later in the summer. Borrowers took out 23,400 remortgaging loans, worth £3.1 billion (21% lower by volume and 18% lower by value than in May, and down year-on-year 25% by volume and 18% by value).
First-time buyer activity, which had been affected in the spring by the stamp duty concession ending in March, held up in June. The return to a more normal pattern of activity continued, with half of buyers in this group purchasing properties priced between £125,000 and £250,000, broadly in line with what we have seen since 2007 (the proportion had risen to 63% in March, driven by the stamp duty incentive).
Loans taken out by movers in June totalled 28,200, worth £4.7 billion - around 3% lower by number than in May and in June last year. In the second quarter, however, movers took out 79,900 loans, 13% more than in the first three months of the year (71,000). Activity by movers was the main driver of a 6% increase in the number of loans for house purchase in the second quarter, with first-time buyer numbers in the first half of the year fluctuating as a result of the stamp duty changes.
Commenting on the data, CML director general Paul Smee said: "Lending figures have see-sawed in the first half of the year, and we may see more fluctuations in the coming months as the effects of the Olympics and other special events in the UK this year are reflected in our lending numbers. Within that broader context, first-time buyer activity is showing some signs of resilience as we move away from the obvious effects of the stamp duty concession, a trend that it would be good to see maintained."