Wed, 13 Aug 14
New CML data show that lending remains driven primarily by house purchases, rather than re-mortgaging. Total gross lending in June grew by 6 per cent on the month to £17.9 billion - 20 per cent higher than June last year - according to the Bank of England. In the second quarter of 2014, gross lending totalled £51.4 billion - up 11 per cent on the first quarter, and 23 per cent year-on-year.
Despite concerns that the tighter rules would see first time buyers struggle to access financing, there were 28,600 first-time buyer loans in June - 7 per cent more than in May, and 19 per cent up on June 2013. By value, there was £4.2 billion of lending to first- time buyers in June - 11 per cent up on May and 27 per cent higher than June last year.
Lending to home movers also grew, but by less. In June, the number of loans to movers was 31,900, 4 per cent up on the previous month and 11 per cent on June last year. By value, lending to movers was £5.9 billion, 5 per cent up on May and 23 per cent up on June last year.
Re-mortgage lending remains muted compared with both first-time buyer and home-mover lending. The number of re-mortgages in June was 1 per cent up on May but 8 per cent down on June last year, although the value (£3.7 billion) was up 6% on both.
Buy-to-let lending grew 5 per cent over the month to £2.2 billion in June, though the number of loans was the same as May (15,600). But growth was strong compared with June last year - 38 per cent up by value and 23 per cent by number.
Paul Smee, director general of the CML, commented: "For the second month running since new FCA rules took effect, lending characteristics remain similar to the market beforehand. We now feel confident that, as we would hope, the MMR effect is more gentle dampener than hard brake. As we recently suggested in our revised forecasts, lending levels should continue to increase modestly over the course of the year, driven mostly by house purchase but with re-mortgaging also recovering."
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