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Homemover mortgage lending up 10 per cent in December

  • 18/02/2020
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Gross mortgage lending to homemovers grew by 10 per cent year-on-year in December to £6.8bn, analysis from UK Finance has revealed.


There were 29,400 homemover mortgages completed in December 2019, 3.2 per cent more than in the same month a year earlier.

On average, homemovers borrowed £230,847 to purchase a house representing a six per cent rise on December 2018 when they borrowed £216,886.

Both loan to value (LTV) and income multiple measures nudged up slightly from 67 per cent to 68 per cent LTV and 3.31 times income to 3.33.


First-time buyer activity

Lending activity to first-time buyers was more subdued. Gross mortgage lending grew by four per cent year-on-year to £5.1bn. The number of mortgages advanced to first-time buyers rose by 100 to 29,490. The average loan size grew by four per cent to 174,275 while the LTV and income multiple ratios increased slightly from 76 to 77 per cent LTV and 3.52 to 3.54 per cent.

Mike Scott, chief property analyst at estate agency Yopa, said: “The number of mortgages for home purchase was up by 1.7 per cent compared with December 2018, confirming the upturn in the market that we have seen in other recent data. It takes a long time for an increase in buyer interest to feed through into mortgage completions, since the whole homebuying process takes at least four months, and so this December figure demonstrates that the upturn in market activity must have started much earlier in the year.”

Scott said it was disappointing that almost all the increase in activity was seen in the homemover market but added that the first-time buyer sector had performed well over the last two years and had not gone into reverse.

“It is likely that first-time buyers are running up against their affordability limits, with the average first-time buyer in December borrowing 3.54 times their gross household income, compared with 3.52 in both November 2019 and December 2018,” Scott added.

“Even with the recent surge in market confidence, there seems to be little scope for first-time-buyer house prices to rise faster than average earnings growth, which is currently running at 3.4 per cent a year.”

Remortgage market

There was little change in the pound-for-pound remortgage market in the 12 months to December. There were 16,490 remortgages with no additional borrowing in December 2019, 0.5 per cent fewer than in December 2018.

The number of capital raising remortgages issues in December grew by six per cent year-on-year to 16,820. The average additional amount borrowed was £50,702.

There were 16,820 new remortgages with additional borrowing in December 2019, 5.9 per cent more than in the same month in 2018. For these remortgages, the average additional amount borrowed in December was £50,702.

Buy-to-let sector

There were 5,700 buy-to-let home purchase mortgages completed in December 2019, 3.6 per cent more than this time last year. The value of lending remained static at £800m.

Some 13,300 landlords remortgaged their properties in the final month of the year, representing a rise of 2.3 per cent on the year before. The value of lending rose by five per cent to £2.2bn.


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