Mortgage lending jumps 12% as market picks up

Published 13th Apr 2010

The number of people taking out mortgages rose by 12 per cent in February compared with the previous month, figures from the Council of Mortgage Lenders (CML) showed today.

Some 35,000 house purchase loans worth a combined £5 billion were taken out in February, pointing to a modest recovery in the mortgage market following a dip at the start of the year.

The market remains significantly stronger than a year ago, with 49 per cent more borrowers taking out loans in February than in the same month last year. The value of mortgages drawn was 67 per cent greater.

In January almost 50 per cent fewer mortgages were taken out than in December. Buyers had rushed to beat the end of the stamp duty holiday on December 31, when the relief threshold for residential properties returned to £125,000 from £175,000.

The start of the year is traditionally quiet for mortgage lending. The CML said that the effect of the stamp duty holiday and freezing weather had made it difficult to identify trends in borrowing.

“With the supply of credit still tight and the upcoming election causing political uncertainty we are unlikely to see much change in the near future,” Bob Pannell, the CML’s head of research, said.

“[However], the new stamp duty exception for first-time buyers could boost the market somewhat and we hope to see the traditional seasonal pick-me-up as the weather gets warmer and the days get longer.”

Remortgaging activity remained lacklustre, with February’s figures showing that the number of people taking out remortgage loans grew by only 2 per cent.

The number of people remortgaging their houses has fallen back over the past year, as rates become prohibitively expensive for homeowners that do not hold significant equity.

The CML said that the remortgaging market was expected to remain weak “for some time yet”.

Meanwhile, house prices fell by 0.1 per cent in February on January, despite being 7.4 per cent higher than in the same month last year, according to official figures from the Department for Communities and Local Government (DCLG).

The average house price in the UK was £204,359 in February.

First-time buyers were hit the hardest, each paying an average of 9.3 per cent more in February than a year ago.

The price of new properties has fallen, standing at 3.9 per cent lower in February than in the same month last year.

The DCLG data suggested that the rise in house prices had slowed, with prices rising by 2.9 per cent in the quarter ending February compared with a larger rise of 3.4 per cent for the quarter ending November 2009.

Source: ' Times '

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