The Council of Mortgage Lenders in the UK has just released its data for January 2012 which shows house purchases and remortgaging fell in January compared to December 2011.
Just 35,600 loans (worth £5.3 billion) were taken out for house purchases in January, which is an increase of 22% by volume, and 23% by value compared to January 2011, but as a fall of 25% by volume, and 24% by value compared to December 2011. This seasonal variation is to be expected, and the sluggish real estate market typically reflects the cold weather, shorter days and lack of money following Christmas. January also saw a fall in the number of loans for remortgaging. There were 26,600 loans taken out, worth £3.6 billion, and remortgaging saw its first year-on-year fall since the end of 2010. The number of loans fell by 13%, while the value fell by 5% compared to January 2011.
First-time buyers and home movers in January increased when compared to January 2011, but fell when compared to December. The value and number of first-time buyer mortgages dropped 30% from December, but increased by 23% compared to January a year ago. The number of home movers fell from 28,900 in December to 22,400 in January, while the value fell from £4.7 billion to £3.6 billion in January. But the numbers do show a significant increase on the previous January, when 18,600 home movers took out mortgages worth £3.1 billion.
Over the course of the last year first-time buyers have typically borrowed 80% of the properties worth, while typical home movers have borrowed 70% for four consecutive months. First-time buyers are paying slightly less of their income on mortgage interest at 12.2%, down from 12.3% in December.
Paul Smee, director-general of the Council of Mortgage Lenders said "We traditionally see a substantial fall in lending figures at the start of the year, reflecting the lack of enthusiasm by buyers to move house during the post-Christmas months, and this January has been no exception. But the year-on-year rise in house purchase lending suggests that lending levels are generally rising, although we expect the trajectory to be lumpy rather than smooth this year. Average deposits for first-time buyers have stayed steady at around 20% for over a year, but that figure may start to drift down gently over the coming months, especially as NewBuy has been launched for new homes."
The introduction of the NewBuy scheme could enable first-time buyers and home movers to save up significantly less money as a deposit, as the scheme requires just 5% for new build properties, with the government and developer putting in 5% and 3.5% respectively as a guarantee for the lender should the property decline in value.