According to the latest report from the Council of Mortgage Lenders (CML), homebuyer numbers saw a marked increase on February figures as 61,700 loans were taken out during the month - a rise of 27% against February but down 12% on March 2016.

First-time buyer and home mover activity came out of the winter seasonal dip this month with the highest monthly volumes of the year so far. While home movers decreased year-on-year compared to March 2016, more loans were advanced to first-time buyers this year than in any month of March period since 2007.

On a quarterly basis, house purchase activity was at its weakest for two years since the first quarter of 2015. By contrast, the number of re-mortgage loans advanced to borrowers was at its highest since the first quarter of 2009.

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The proportion of household income used to service capital and interest rates continued to be near historic lows in March for both first-time buyers and home movers at 17.2% and 17.5% respectively.

Affordability metrics for first-time buyers saw the typical loan size increase slightly from £132,200 in February to £133,500 in March. The average household income remained the same month-on-month at £40,000. This meant the income multiple went from 3.54 to 3.53.

The average amount borrowed by home movers in the UK decreased to £172,000 from £176,000 the previous month, while the average home mover household income decreased slightly month-on-month from £55,000 to £54,100. The income multiple for the average home mover was unchanged at 3.34.

Paul Smee, Director General of the CML, had this to say: “Comparing this March to last year is misleading because of the peak in activity before the stamp duty changes last Spring. Overall, lending trends have remained reasonably consistent. The relatively sluggish activity among home-movers stands in contrast to the growth in first-time buyer and re-mortgage activity, but in aggregate the market is showing broadly the levels of activity we expected. As we head into the summer, we expect a continuation of these trends, with both first-time buyer and re-mortgage lending expected to maintain momentum in the light of the very attractive deals currently available.”

Re-mortgaging homeowners are seeking out lower interest rates and longer fixed deals, according to conveyancing service provider LMS.

Some 32% of homeowners who re-mortgaged in March moved to a five-year fixed deal, despite just one in ten previously having fixed their rate for so long. Figures from LMS show 19% of those re-mortgaging lowered their monthly repayments, while 84% saw their interest rate fall.

But the average mortgage rate has climbed for the first time since September 2016. The average rate was 2.13% in February, up from 2.06% in January – the biggest jump since June 2012. Just 1% of people surveyed by LMS expect rates to fall, while 46% think rates will rise within a year. 

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Meanwhile, the number of people on a variable rate fell from 19% to 7%. The average mortgage repayment now accounts for 17.3% of a homeowner’s annual salary, down from 18.4% in January.

LMS chief executive Andy Knee says: “Homeowners have sought out cheap prices and long-term security when re-mortgaging. For those who managed to re-mortgage in March, this will be of paramount importance in the months to come.”

Re-mortgaging made up 25% of total lending in March, down from 29% in February. Re-mortgage lending edged up just 1% to £5.26bn in the month.

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Analysis from e.surv has found that over a fifth of mortgages in February were taken out by borrowers with small deposits - a substantially higher figure than both the previous month and the same point last year.

According to the report, borrowers with a deposit of 15% or smaller made up 20.5% of the market during February, up from 18.7% in January and 15.7% in February 2016. This growth came despite the overall number of house purchase approvals dropping slightly between January and February. There were 66,911 loans (seasonally adjusted) approved this month versus 67,430 in January. This figure is down 7.4% compared to the same point in 2016.

The proportion of loans made to home buyers with large deposits dipped below 35% this month, but these borrowers continue to outstrip their small deposit counterparts. Larger deposit borrowers – defined as those with a deposit of 60% or more – made up 34.7% of the market in February.

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However this figure is below the 35.4% of all mortgage approvals recorded in January and continues a general trend away from large deposit borrowers in recent months. The North West reclaimed its position as the best place to purchase a home for small deposit buyers, who represented 30.8% of the North West mortgage market in February – higher than the 27.2% seen in January.

Yorkshire slipped back to second place with the proportion of small deposit loans reaching 30.1% this month, lower than January’s 31.6%. These were the only two regions where the level of small deposit borrowers outnumbered large deposit ones. In the North West 24% of loans went to those with big deposits and in Yorkshire it was 25.2%. Northern Ireland was the other area which saw more than 30% of the market taken by small deposit borrowers.

At the other end of the scale, London was the area most dominated by buyers with big deposits. Some 43% of borrowers in the capital this month had deposits of more than 60% - more than anywhere else in the UK. By contrast, just 12.8% of approvals in London went to small deposit borrowers – less than all other areas surveyed.

The Council of Mortgage Lenders says gross mortgage lending hit £18.9bn in January, up 6 per cent month on month and 2% year-on-year. The trade body says the January figure is the highest for any January since 2008, when the figure was £25.2bn.

CML economist Mohammad Jamei said: “Overall mortgage lending continues to hold up pretty well, but we seem to have a twin-track market. Weakness in buy to let and home movers has been offset by an increase in first time buyers and re-mortgage lending.

“A continuing acute shortage of homes being offered for sale is one aspect of a broken housing market, that looks unlikely to resolve in the near term.”

Legal & General Mortgage Club director Jeremy Duncombe says: “The first set of figures for 2017 set the precedent for the rest of the year.

“These numbers confirm that as gross mortgage lending continues to rise annually, it is still very much business as usual in the mortgage market, despite the economic uncertainty that characterised most of last year.”

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Yorkshire Building Society chief economist Andrew McPhillips says: “This annual growth in mortgage lending was most likely driven by an increase in the number of people re-mortgaging to better rates, offsetting the impact of a fall in property transactions.

“Affordability constraints, caused by increasing house prices, the cost of stamp duty and rising inflation, are still hindering the market by limiting the number of people who can afford a property.”

One Savings Bank sales and marketing director John Eastgate says: “The mortgage market has started the year on the front foot, proving its resilience against a cocktail of economic and political uncertainty.

“However despite the rises in both mortgage activity and house prices, it is premature to assume that all is well in the housing market. The housing white paper recognised the problem of undersupply and the affordability issues this generates. The paper has met with scepticism and even if it delivers, this will take time.

“In the meantime, for those who can’t buy, the private rented sector is still to see the full impact of tax and prudential changes for buy to let.”

New research from Halifax has found that, since the pre-crisis peak of 2007, there has been a noticeable improvement in mortgage affordability across the majority of all local authority districts.

The data revealed that mortgage affodability has improved by 18% since 2007. Typical mortgage payments for both FTBs and  homemovers at the average LTV ratio stood at 30% in Q4 2016 compared to the peak of 48% in Q3 2007.

Halifax says that historically low mortgage rates have been the main driver behind the significant improvement in affordability since 2007.

Despite average house prices growing by 7% in the past year, mortgage affordability in Q4 2016 was unchanged from 2015 at 30% and remains comfortably below the long-term average of 35%. This proportion has stayed low due to further dip in mortgage rates during 2016, from an average of 2.49% in Q1 to 2.17% in Q4.

There have been significant improvements in affordability in almost all local authority districts since 2007, with mortgage payments falling by at least 40% as a proportion of average earnings in 10 areas. Almost two thirds (60%) of all districts have seen an improvement of at least 15 percentage points over the period.

In England, the most significant improvement has been in South Bucks where the proportion of average disposable earnings devoted to mortgage payments has plummeted from 96% to 51%.


However, there are seven areas where affordability on this measure has deteriorated since Q3 2007, including Mole Valley in Surrey (from 57% to 65%), and the London boroughs of Waltham Forest (52% up to 56%) and Harrow (from 58% to 63%). These areas have seen significant house price growth in the range of 46% to 88% since 2007.

Seven of the 10 most affordable local authority districts are in Scotland, with West Dunbartonshire, North Lanarkshire and East Ayrshire among the most affordable local authority districts in the UK. There, typical mortgage payments account for 16% of average local earnings in all areas.

Unsurprisingly, the 10 least affordable areas are predominantly in London.

Martin Ellis, housing economist at Halifax, said: “Looking back almost a decade, there has been a considerable improvement in housing affordability across the country, which has been maintained over the past year as further falls in mortgage rates have offset the effects of higher house prices.

The significant reduction in mortgage payments by a typical borrower has resulted mostly from record low rates that have provided monthly savings of, on average, around £220 in 2016 compared to a peak monthly payment of £888 in 2007.”