Gross UK mortgage lending held steady in August and was an estimated £16.4bn. This is down 2% on July’s gross lending total of £16.7bn but is 28% higher than August last year (£13bn).
Despite a slight decline in total gross lending in August, lending for home-owner house purchase continued to show growth.
In total, 61,300 house purchase loans were advanced in August, up 7% on July and 15% compared to August 2012.
This amounted to £9.7bn in total, a 7% increase on July and an increase of 20% by value compared to August last year.
Lending to first-time buyers totalled 27,100 loans, an increase of 7% on July and a year-on-year increase of 33%.
These loans totalled in value £3.8bn which was an increase of 9% compared to July and a 46% increase by value on August last year.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Although August tends to be one of the quieter months of the year for the housing market as would-be buyers focus on their summer holidays, there was no let up in mortgage lending this year.
“There was a significant jump in first-time buyers in particular, with 33% more loans advanced and a 46% increase in the value of those loans compared with the same period last year.
“First-time buyers are finding it easier to get a mortgage, as Funding for Lending pushes down rates across the loan-to-value curve.
“The publicity surrounding the launch of the second phase of Help to Buy is also boosting the market, creating interest and instilling the belief that it is finally possible to get a mortgage.
“While property prices continue to rise in parts of the country, fuelling fears of a house-price bubble, this is not yet affecting affordability, even though first-time buyers borrowed slightly more relative to income in August compared with July.
“Cheaper mortgage rates mean total payments remain low relative to income, which is encouraging as it means those getting on the property ladder for the first time are not over stretching themselves.”
Accompanying this upward trend in activity, first-time buyers borrowed more relative to income in August compared to July - 3.36 times borrower income in August compared to 3.31 in July.
However, due to the downward trend in mortgage interest rates, total mortgage payments have remained low relative to income.
The typical first-time buyer mortgage payment represented 19.3% of income in August, a figure it has fluctuated around since March.
There was a record high of 86% of borrowers taking fixed rate mortgages with 94% of first-time buyers opting for a fixed rate mortgage.
Loans advanced to home movers totalled 34,200 in August, which was up 7% compared to July and an increase of 5% on August 2012.
Total lending to home movers was worth £6bn in August, an increase of 9% by value on August last year.
Home-owner remortgage fell by 7% in August compared to July with 25,100 loans advanced, but this was significantly up on August 2012.
The value of these loans totaled £3.5bn which was a decrease of 9% in value on July but up 17% compared to August last year.
Bank of England approvals figures suggest this same pattern for remortgaging will continue into September completions figures.
Lending for buy-to-let decreased slightly in August totaling £1.9bn compared to £2bn in July. Total amount of loans for buy-to-let was 14,900 in August, a slight decrease on 15,200 in July.
Buy-to-let house purchase loans increased to 7,900 in August from 7,600 in July. However, the value of these loans remained the same at £900m.
The small fall in buy-to-let lending was caused mainly due to a fall in buy-to-let remortgage lending from £1.1bn in July to £1bn in August. This came to 6,900 loans in August compared to 7,200 in July.
George Spencer, chief executive officer of Rentify, the online lettings company, said: “Landlord optimism is at its highest level in several years, with experienced and novice investors taking the plunge and buying for the first time or expanding their portfolios. Many are investing for the long term, which is good news for the private rental sector.
“With the recovery coming from such a low base, we expect the buy-to-let market to thrive in coming months.
“There are fears that with more first-time buyers returning to the market there will be fewer tenants but if landlords do their research and buy carefully in an area likely to appeal to tenants, there shouldn't be a problem.
Paul Smee, director general of the CML, added: “The healthy growth in all lending areas compared to the same time last year is indicative of more confidence in the market.
The high number of borrowers, in particular first-time buyers, opting for fixed rates reflects the attractive pricing currently on products which can provide helpful stability to borrowers for the next few years."
