Home buying activity declines in January   

According to data published by the Council for Mortgage Lenders, UK home buyers borrowed £8.4 billion in January, down 28 per cent on December and unchanged on January 2016.

This came to 45,700 loans, down 28 per cent on December and 1 per cent on January 2016.

First-time buyers borrowed £3.6 billion for home-owner house purchase, down 29 per cent on December but up 9 per cent on January 2016.

They took out 22,600 loans, down 29 per cent month-on-month but up 7 per cent year-on-year.

Home movers borrowed £4.9 billion, down 25 per cent on December and 4 per cent year-on-year. This equated to 23,000 loans, down 27 per cent month-on-month and 7 per cent compared to January 2016.

Home-owner remortgage activity was up 54 per cent by value and 46 per cent by volume on December. Compared to January 2016, remortgage lending was up 22 per cent by value and 21 per cent by volume.

Gross buy-to-let saw month-on-month increases, up 11 per cent by value and 12 per cent by volume. Compared to January 2016, both the number of loans and the amount borrowed decreased by 16 per cent.

Looking on a seasonally adjusted basis, the month-on-month change in first-time buyer and home mover activity was minimal. First-time buyer lending increased 2 per cent by value with the number of loans down 2 per cent compared to December.

There was growth by volume and by value year-on-year. The number of home mover loans remained unchanged month-on-month and the total amount borrowed increased by 3 per cent, while year-on-year activity decreased slightly by value and by volume. Full seasonally and non-seasonally adjusted data is attached to this email.

Paul Smee, director general of the CML, said: “January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector. We expect a seasonal dip in activity in the winter months and this appears to be the case in January. However, the lull in moving activity appears stubbornly persistent, and we have commissioned research on the reasons why the number of transactions seems in secular decline.

“Buy-to-let house purchase activity continues to be weak, despite strong buy-to-let remortgage levels. This will likely remain so going forward as lenders tighten affordability criteria ahead of the PRA mandated stress tests, and the introduction of tax changes in April.”

The proportion of household income used to service capital and interest rates continued to be near historic lows this month for both first-time buyers and home movers both at 17.5 per cent.

Affordability metrics for first-time buyers saw the typical loan size decrease from £136,000 in December to £132,400 in January. The average household income also decreased to £40,200 from £40,400. This meant the income multiple went from 3.57 to 3.53.

The average amount borrowed by home movers in the UK increased to £175,500 from £175,000 in December, while the average home mover household income remained unchanged month-on-month at £55,000.

The income multiple for the average home mover went from 3.32 to 3.34.