Lending to home owners in Wales increased by 25% year on year in the first quarter of 2016, according to the latest data from the Council of Mortgage Lenders (CML).
On an unadjusted basis home owners borrowed £850 million, but while this was up 29% year on year it was down 16% quarter on quarter. They took out 6,600 loans, down 16% on the previous quarter but up 25% compared to the first quarter of 2015.
First time buyers borrowed £330 million, down 20% on the fourth quarter 2015 but up 22% on the same period last year. This totalled 3,000 loans, down 19% quarter on quarter but up 20% year on year. The average age of a first time buyer is now 29 years old.
Home movers borrowed £530 million, down 12% on the fourth quarter 2015 but up 36% compared to a year ago. This totalled 3,600 loans, down 14% quarter on quarter but up 29% year on year.
Remortgage activity totalled £420 million, down 2% quarter four but up 20% compared to a year ago. This came to 3,700 loans, down 3% quarter on quarter but up 12% year on year.
‘The first quarter of the year typically sees a seasonal lending dip, but the year on year growth in activity in all lending types is encouraging,’ said Julie Ann Haines, CML Cymru chair.
‘It was the best first quarter performance for all lending types in Wales since 2007 and suggests a growth period for the market. With affordability improving this quarter, supported by a generally favourable economic backdrop, we would expect further growth in lending as we go into the summer months,’ she added.
The CML report points out that while seasonal factors generally cause activity to be lower this period, this is the highest number of loans and the most borrowed for house purchase in the first quarter of the year since 2007. This was also the case for first time buyer, home mover and remortgage activity.
Affordability metrics for first time buyers improved in the first quarter of 2016 compared to the fourth quarter of 2015. The amount borrowed went from £106,000 to £104,625 and the average household income of a first-time buyers went from 32,615 to 33,092 meaning income multiple in Wales from 3.30 to 3.22.
The amount home movers borrowed went from £128,795 to £130,000 and the average household income of a home movers went from 46,818 to 47,500 meaning income multiple in Wales from 2.83 to 2.85.
The amount first time buyers are spending of their monthly gross income to service capital and interest repayments was 17.2%, which was the lowest level since the CML began tracking this metric in 2005.
Home movers are also paying close to record low proportions of income at 16.9%, unchanged from the fourth quarter 2015 and just off the lowest since we began tracking this metric in 2005 of 16.8% in the third quarter of 2013.