Pre-Christmas house purchases up 17%

Brits picked up the home buying pace ahead of the traditional Christmas slowdown as first and next-time buyers snapped up 17% more homes in October, the Council of Mortgage Lenders data showed.

In October, 60,800 loans were advanced totalling £9.7bn representing a 24% increase on October 2012. October was the second highest monthly lending amount for home-owner house purchases since November 2007, behind December 2009 which saw a rush of purchasing before the end of the stamp-duty holiday.

First-time buyers received 26,800 loans in October, a 16% increase on the previous month and a 33% increase on October 2012 – totalling £3.7bn.

Next-time buyers were slightly more active receiving 33,900 loans in October, a 19% month-on-month increase, totalling £5.9bn. The number of loans advanced was 16% higher than October 2012.

Paul Smee, director general of the CML, said: “After years of a relatively flat mortgage market, 2013 has shown signs of lending turning a corner and looks set to finish the year strongly.

“Increased financial optimism among the public as the economy recovers seems to be driving this upward trend and it is welcome to see that first-time buyers continue lending momentum as more look to own their first home."

But month-on-month remortgage activity fell by 12% in October as 28,300 loans were advanced to home owners worth £4.2bn.

Buy-to-let

Landlords received 16,200 buy-to-let loans in October, an increase of 11% on the previous month, the value of which reached £2.1bn.

Of these 8,500 were for purchasing rental properties worth £1bn while remortgages accounted for 7,600 worth £1.1bn – an 11% increase on the previous month, with the difference representing further advances.

The typical first-time buyer income multiple declined slightly with first-time buyers typically borrowing 3.36 times their gross income compared to 3.39 in September.

The typical loan size for first-time buyers was £119,500 in October. This was the highest ever recorded level but, in parallel to this, the typical income of first-time buyer households rose to £36,460, which was also the highest ever recorded level.

The continued downward drift in mortgage interest rates have kept borrowers' payment burden low. First-time buyers spent 19.3% of gross income to cover capital and interest payments, slightly above the 19.2% in September and close to the lowest recorded monthly figure since 2005 of 19.1% recorded in April 2012 and April 2013.

Affordability

The typical first-time buyer income multiple declined slightly with first-time buyers borrowing 3.36 times their gross income compared to 3.39 in September.

The typical loan size for first-time buyers was £119,500 in October and the average LTV remained unchanged at 80%. This was the highest ever recorded level but, in parallel to this, the typical income of first-time buyer households rose to £36,460 which was also the highest ever recorded level.

The continued downward drift in mortgage interest rates have kept borrowers' payment burden low. First-time buyers spent 19.3% of gross income to cover capital and interest payments slightly above the 19.2% in September and close to the lowest recorded monthly figure since 2005 of 19.1% recorded in April 2012 and April 2013.

Home movers’ income multiple remained unchanged month-on-month at 2.97 times gross income while the average LTV also remained unchanged at 80%. Home movers spent 8.7% of their income on interest payments and 18.5% on capital and interest payments.