The Council of Mortgage Lenders (CML) has given an update on mortgage activity by home movers, first-time buyers and remortgagers during the month of October.

Key Figures

The figures show that on an unadjusted basis, in October:

- Home-owners borrowed £10.5 billion for house purchase, down 8% month-on-month and 11% year-on-year. They took out 57,800 loans, down 8% on September and 13% on October 2015.
- First-time buyers borrowed £4.5 billion, down 8% on September and 2% on October last year. This equated to 28,900 loans, down 8% month-on-month and 4% year-on-year.
- Home movers borrowed £5.9 billion, down 9% on a month ago and 18% compared to a year ago. This represented 28,900 loans, down 8% month-on-month and 20% on October 2015.
- Remortgage activity totalled £6.1 billion, up 11% on September and 7% compared to a year ago. This came to 34,700 loans, up 10% month-on-month and 5% compared to a year ago.

In addition, the CML figures show that landlords borrowed £3 billion, up 7% month-on-month but down 21% year-on-year. This came to 18,600 loans in total, up 2% compared to September but down 25% compared to October 2015.

Affordability

Mortgages are becoming increasingly affordable for borrowers, with the amount they are paying as a percentage of their household income to service capital and interest rates reaching an another historic low during October for both first-time buyers and home movers at 17.6%.

“Buy-to-let house purchase lending remains weak following the change to stamp duty on second properties in April,” commented Paul Smee, director general of the CML. “With lenders now tightening affordability criteria ahead of the Prudential Regulation Authority’s stress tests and the forthcoming tax relief changes next year, these lower volumes are likely to be the ‘new normal’.”

“Home-owner and buy-to-let remortgage lending, however, has recovered and is running at its strongest levels since 2009,” he added. “This appears to be linked to borrowers taking advantage of the re-pricing of mortgages following the base rate cut.”

Housing Market Forecasts

The CML has also published its new housing market forecasts, which been revised downward to take into account economic uncertainties as well as new tax burdens and regulatory changes in the housing and mortgage markets.

The CML now expects gross lending of £248 billion in 2017 and £252 billion in 2018, with net lending of £30 billion in each of those years.

“Overall, the mortgage market remains resilient but is likely to plateau rather than grow much for the next couple of years,” explained Paul Smee. “Gross lending is likely to hover around the £250 billion mark in 2016, 2017 and 2018. Property transactions look set to drift down slightly, although we do not expect house prices to fall, and net lending seems unlikely to get above £30 billion next year.”

“The housing market is relatively well insulated from direct Brexit effects as most activity is driven domestically, but it is not immune from more generalised economic uncertainty,” he said. “And we expect any modest strengthening in home-owner lending to be rather offset by a less active house purchase market in buy-to-let, as both tax and regulatory changes bite on landlords.”

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