Gross mortgage advances of £63.1bn were recorded in the fourth quarter last year, according to the Bank of England’s latest lending statistics.
The proportion of lending to first-time buyers increased in the quarter by 0.5 percentage points to 20.9 per cent in the fourth quarter of 2015.
The value of residential loans advanced to first-time buyers increased by £2bn from the fourth quarter of 2014 to £13.2bn in the fourth quarter of 2015.
Buy-to-let’s proportion of lending rose marginally from 15.6 per cent in the third quarter of 2015 to 15.9 per cent in the fourth quarter of 2015.
Buy-to-let advances increased over the last year from £7.7bn advanced in the fourth quarter of 2014 to £10bn in the fourth quarter of 2015 - the greatest amount since 2007.
The increase in buy-to-let advances came as the chancellor announced plans to introduce a 3 per cent increase on stamp duty for buy-to-let second homes in his Autumn Statement.
Meanwhile, the proportion of remortgages increased from 24.1 per cent in the third quarter of 2015 to 25 per cent in the fourth quarter of 2015.
The Bank of England also found the proportion of gross advances at a loan-to-value of more than 90 per cent decreased by 0.1 percentage points over the quarter to 3.2 per cent in the fourth quarter of 2015.
The proportion of gross advances that are a combination of a LTV over 90 per cent and loan-to-income multiple of more than three-and-a-half times for single income borrowers (or 2.75 times for joint income borrowers) remained unchanged over the quarter at 2.3 per cent.
Peter Gettins, product manager at London and Country Mortgages, said that the thing that leaps out is the fixed rates – both the fact that popularity is still increasing (84 per cent of gross lending in Q4) and the 65bps drop in the average cost (from 3.37 per cent in Q4 2014 to 2.72 per cent in Q4 2015).
“Much of this has come from higher LTVs – back in December 2014 the leading 85 per cent two-year fixes were a little under 2.5 per cent – and the likes of Accord, West Brom, TSB and Tesco in the 2.39 to 2.49 per cent territory.
“A year later the leading rates were well under 2 per cent, with Post Office, Co-Op, Leeds, First Direct and Tesco all under 1.80 per cent. Likewise, the leading 90 per cent two-year fixes dropped from around 3 per cent to around 2.25 per cent.”
Mr Gettins added that this is a dramatic indication of greater confidence and appetite from lenders.
Steve Griffiths, head of sales and distribution at Kensington, said the increase in lending is to be welcomed, but more must be done to ensure diversity as well as growth is promoted in the industry.
He said: “There are many real life circumstances that can add complexity to a mortgage application and it is still the case that many credit worth potential borrowers who are self-employed, contract workers, or have experienced credit events in the past, don’t think they are able to access mortgage funding.
“As our market grows, we need to make it clear that we are open for business to a diverse range of customers, not just those who tick all the boxes of a standard mortgage application.”
peter.walker@ft.com
