Mortgage interest payments at lowest levels for 35 years
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Borrowers moving home in May saw their mortgage interest payments accounting for the lowest proportion of their income in 35 years, according to the Council of Mortgage Lenders.
The CML claims borrowers are most benefiting from a low base rate with interest payments accounting for only 9.5% of their income in May, the lowest percentage in 35 years.
And house purchase lending rose for the 11th consecutive month.
But the CML expects the positive trend to trail off later this year after government spending cuts and tax increases.
Michael Coogan, director general of the CML, says: “House purchase lending continues its recovery but positive comparisons with equivalent months a year ago look unlikely to continue.
“Activity picked up in the second half of 2009 due to the stamp duty holiday but with the government’s austerity drive picking up momentum we are unlikely to see a repeat of those buoyant numbers this year. Our forecast for gross lending in 2010 may now be looking a little optimistic.”
There were 42,000 house purchase loans in May worth £6bn up 2% in volume and 3% in value on April, and 15% in volume and 28% in value from a year earlier.
Remortgaging activity recovered too with 26,000 loans worth £3.2 billion, up 6% in volume and 10% in value on May but down 14% by volume and by value from a year earlier.
A total of 14,800 loans were made to first-time buyers in May a rise of 300 on April
In May borrowers loaned an average of 3.14 times their income and 75% of the value of their property but interest payments accounted for only 13.2% of their income, the lowest amount since the 13% of March 2004.
And the number moving house rose from 26,500 in April to 27,100 in May.
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