£40bn worth of mortgages in the pipeline, says FSA

Lenders have agreed to advance £40bn worth of mortgages in the coming months, up 13% on the amount agreed in Q1, according to the Financial Services Authority’s latest mortgage lending data.

The statistics show that in Q2 2011, new commitments – the amount of new lending that lenders have agreed to advance in the coming months – totalled £40bn, 13% up on Q1 but 3% down on Q2 2010.

It also reveals that new advances, or gross lending, in Q2 totalled £37bn, 11% higher than in Q1 and almost unchanged on the amount advanced in Q2 2010.

The breakdown of the purpose of new lending shows a rise in lending for house purchase but a decline in remortgage business.

The proportion of lending for house purchase, which includes buy-to-let purchases, increased from 54% in Q1 to 59% in Q2, while the proportion of lending to first-time buyers rose from 14% in Q1 to 16% in Q2.

Gross advances for house purchase also increased in value terms, up by 22% on Q1’s figure to reach £21.6bn.

Remortgage business fell from 38% of new lending in Q1 to 34% in Q2, but remains above the 30% it accounted for in Q2 2010.  

The data also shows a rise in buy-to-let lending, with the proportion of new lending for buy-to-let increasing in each of the last three quarters to account for 8.9% of overall residential lending in Q2.

In value terms there was a 19% increase in Q2 over the amount advanced in Q1 and at £3.2bn this was the largest quarterly amount lent since Q4 2008.

In terms of the total outstanding loan book, the proportion of buy-to-let loan balances has also been increasing over the last few quarters and now stands at 12.08%, the highest percentage since the series started.

In addition, the proportion of new lending at fixed rates increased again in Q2 to 56%, up from a low of 37% in Q1 2010.

The average rate on new advances rose from 3.65% in Q1 to 3.81% in Q2, which the FSA puts down to the increase in fixed rate lending and a rise in the average fixed rate from 4.24% in Q1 to 4.43% in Q2.