Remortgaging up more than 30% year-on-year
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There were 34,100 remortgage loans taken out in August, worth £4.2bn, both the volume and value were more than 30% higher than August 2010.
House purchase lending also rose in August. There were 52,000 loans advanced, worth £7.9bn, up from 48,700 in July and from 51,000 in August 2010.
House purchase lending is spread across both first-time buyers, and home movers and both contributed to the rise.
The number of loans to first-time buyers rose 5% both from last month and August last year, while the value rose by 4% from July and a larger 9% from August 2010.
Home movers took out 33,000 loans in August, an 8% increase on July and up 1% from August 2010.
Lending to both first-time buyers and home movers was at its highest for over a year.
Lending criteria for both groups in August showed little change from the previous months. First-time buyers continued to put down on average 20% of their property’s value as a deposit and borrowed 3.20 times their income, slightly up from 3.17 times in July.
Typical deposits for home movers stayed at 31% for a second month but in August home movers on average paid 9.4% of their income on mortgage interest payments – the lowest since monthly records began in 2002, the CML says this is likely to reflect the low interest rates currently available to borrowers with a large amount of equity, typically home movers.
Some 96% of first-time buyers in August took out a repayment mortgage, unchanged from July and out of 33,000 home movers, some 82% did the same, up from 80% in July.
As existing first-time buyers themselves begin to move home or remortgage, the likelihood is that they will retain a preference for repayment mortgages which will increase the overall popularity of this type of business.
Paul Smee, director general of the CML, says: “Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone, August lending showed welcome signs of life. With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy.”
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Readers' comments (1)
Bob Riach Riach IFA | 11 Oct 2011 11:27 am
After speaking to a local Estate Agent he says that sales where good in September but have slowed down again this month
The lenders need to start bring out lower loan to values especially for first time buyers.
If first time buyers can’t buy, then this stops the lower end of the housing market from moving up and this in turn stops the rest of the market moving.
Some lenders say that they will lend 95% and 90% to first time buyers, however based on my experience most first time buyers are rejected for these loans and are offered loans with a higher deposit that they don’t have.
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