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Lending to FTBs reaches five-year high in 2012

CML

The number of first-time buyers reached its largest yearly total in five years in 2012, according to the Council of Mortgage Lenders.

A total of 216,200 FTBs became homeowners in 2012, the first time the annual total has exceeded 200,000 since 2007 and a 12 per cent year-on-year rise on the 193,000 loans advanced to FTBs in 2011.

On a monthly basis, a total of 19,100 loans, worth £2.4bn, were advanced to FTBs in December, a 11.6 per cent drop on the 21,600 advanced in November, worth £2.7bn, but a 2.7 per cent increase on the 18,600 loans advanced to FTBs in December 2011, worth £2.3bn.

On a quarterly basis, 60,500 loans worth £7.6bn were advanced to FTBs, an 8 per cent increase on the 55,800 loans, worth £7.2bn, in the third quarter and up 14 per cent compared to the 52,900 loans, worth £6.6bn, in the fourth quarter of 2011.

In the fourth quarter, FTBs accounted for 42 per cent of all house purchase loans, compared to 39 per cent and 38 per cent in the third and second quarters, respectively.

There was also a modest increase in lending at higher loan-to-values. While the average LTV stayed at 80 per cent, where it has been for two years, one in 40 FTBs took out a 95 per cent LTV mortgage compared with less than one in 100 a year earlier. Around one in five FTBs borrowed 90 per cent LTV or more.

CML director general Paul Smee says: “Despite the seasonal dip in lending that we normally see in December, the underlying trend for year-on-year increases in house purchase activity continued in 2012.



“First-time buyers, in particular, have benefited from the effects of better funding conditions and the Funding for Lending scheme, with the number of new people moving into home-ownership in 2012 reaching the highest level for five years. This, along with other factors, confirms that lenders really are open for business.”

See the tables below for a breakdown of lending to FTBs:

CML2

As with lending to FTBs, lending to home movers dipped in December. There were 25,900 loans advanced to home movers in December, worth £4.3bn, a 15 per cent dip on the 30,300 loans advanced the month before, worth £4.9bn, and a 9 per cent decrease on the 28,500 loans advanced, worth £4.7bn, in December 2011. On a quarterly basis the number of loans fell 3 per cent from 87,700 in the third quarter to 84,900 in Q4 2012.

House purchase activity also dipped in December. A total of 45,000 loans, worth £6.7bn, were advanced in December, down 13 per cent on the 51,900 loans, worth £7.6bn, in November and by 4 per cent compared to December 2011, when the number of loans advanced to house purchase customers reached 47,100, worth £7bn. In Q4 there were 145,500 loans advanced, up from 143,500 in the third quarter.

Overall there was a 16 per cent fall in remortgage activity in 2012. In the whole of 2011 374,200 loans were advanced to remortgage customers, worth £46.7bn, compared to 313,800 in 2012, worth £40.8bn.

In December, there were 21,400 loans advanced to remortgage customers, worth £2.8bn, down 18 per cent on the 26,200 loans, worth £3.4bn, the month before. On a quarterly basis, remortgage activity was up between the third and fourth quarters, from 71,700 loans, worth £9.4bn, to 76,300, worth £9.9bn.

Around 69 per cent of mortgages advanced in 2012 were fixed rate loans, compared to 62 per cent in 2011 – the largest proportion since 2007. Around 83 per cent of FTBs chose a fixed rate loan in 2012.

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