Mortgage lending creeps higher
By Lee Wild
Tue 14 Apr 2009
LONDON (SHARECAST) – The number of loans for home purchases jumped 4% in February from the month before, according to new data from the Council of Mortgage Lenders (CML).
It found 24,300 mortgages worth £3.1bn were completed by banks and building societies during the month, up from 23,400 in January.
The news follows recent data from the Nationwide revealing UK house prices rose 0.9% in March, the first increase since October 2007.
But CML director general Michael Coogan urges caution. “We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year,” he said.
“Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own.”
There was a sharp fall in remortgaging activity as borrowers reaching the end of their current deal chose to stay on their lender’s standard variable rate. The recent run of interest rates cuts has boosted their appeal.
First-time buyers are finding it slightly easier to get on the housing ladder as lenders start to offer better deals for those with smaller deposits.
There were 9,400 loans to first-time buyers in the month, up 7% from January, but still way down on the 17,400 reported a year ago.
CML figures also showed homeowners are starting to prefer the security of fixed rate deals to tracker products. As well as wanting predictability, many fear interest rates could rise sharply some time next year.
The number of new deals at fixed-rates jumped to 56% in February from 49% the month before, while trackers saw their popularity decline to 31% from 38%.
Meanwhile, the slump in house prices and the government’s one-year stamp duty holiday for properties costing up to £175,000 have benefitted an increasing number of people. Some 57% didn’t pay any stamp duty at all in February, up from 48% a year earlier.
