Of the total £18.6 billion gross advances, £9.6 billion (52%) was accounted for by remortgaging. Lending in January showed a slight seasonal dip, but remained very strong at £18.6 billion compared with £13.4 billion in January last year. Lending for house purchase totalled £7.5 billion, well up on the £6.7
billion in January 2002, but accounted for only 40% of the total – the lowest proportion on record.
Looking at lending for house purchase, only one third of lending was to first-time buyers. The proportion of lending to first-time buyers has been declining steadily for the last few years, probably reflecting increased affordability constraints for this group as a result of rising house prices. The average loan to first-time buyers was around £78,500 in January – well down on the £87,000 recorded in December. While too much should not be read into a single month’s figures, this may signify a slowdown in activity among first-time
buyers in the highest priced areas of the UK.
Commenting on the figures, director general Michael Coogan, said: “These figures reinforce our view that affordability constraints will affect the market and cause a
gentle slowdown. This now appears to be beginning, particularly among first-time buyers.
“The phenomenal rise in remortgaging reflects both the attractiveness of the refinancing deals
available, and also the continuing appetite among consumers for equity withdrawal.
“With average loan to income ratios continuing to creep up, we would continue to urge borrowers to
think hard about how to manage their levels of borrowing. With over a third of borrowers choosing
fixed rates, it appears that a significant number of borrowers are taking the opportunity to offset the
risk of higher mortgage repayments if rates do rise.”
