Nearly half of borrowers took out fixed rate in June

Nearly half of new borrowers took out a fixed rate mortgage in June, reports the Council of Mortgage Lenders.

The CML says fixed rates had proved unpopular this year compared to the last several years due to an historic low bank rate with little prospect of the rate rising.

House purchase loans were up 23% in value to £7.6bn in June with 52,000 loans advanced.

The house purchase lending was up 14% in volume  and 27% in value from June 2009.

It is now the twelfth consecutive month in which lending has been higher than its previous year’s levels.

Paul Samter, CML economist, says: “For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory. 

“But we still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government’s austerity measures and their possible impact.”

Remortgages also saw modest increased with 27,000 loans, worth £3.4 billion, up from 26,000, worth £3.2 billion, in May 2010 but down 20% in volume in June 2009 from 34,000, worth £4.2bn.

Q2 2010 saw 136,000 house purchase loans, worth £19.7bn., which is 20% higher, by volume and value, than the Q1 2010 and up 17%, by volume, and 30%, by value, than Q2 2009.

For remortgaging, the second quarter saw 77,000 loans, worth £9.6 billion,, up 2% by volume, with no change in value, from Q1 2010.

But in stark contrast to house purchase lending, the figure was down 20% by volume and 19% by value from Q2 2009.

There were 52,200 loans, worth £6.2bn, to first-time buyers from April to June, up from 43,400, worth £5bn, from January to March and 85,300 home mover loans, worth £13.5bn, up from 70,700, worth £11.2bn.