Mortgage lending jumps 45% as first-time buyers return to market

Published 19th May 2010

March figures up 45% year on year, with 42% more first-time buyers than the same period last year – but remortgaging falls


House purchase lending increased by 45% year on year in March, the ninth consecutive month of growth, according to figures published by the Council of Mortgage Lenders today.

But remortgaging was down 29% year on year, the 23rd consecutive fall, reflecting the "moribund" nature of the remortgaging market, said the CML.

Forty-five thousand loans were borrowed in March, up 25% on the previous month in volume and 24% in value.

The CML said that first-time buyers contributed a large amount to the increase, borrowing 17,300 loans worth £2bn in March, up 27% on February and 42% compared to March 2009. In contrast, home movers borrowed 27,500 loans worth £4.3bn, a 24% rise in volume and 23% in value compared to February.

First-time buyers also borrowed an average of 76% for the second month running, the first time average deposits for first-time buyers have been lower than 25% for more than a month since January 2009.

A spokesman for the CML said: "Only time will tell if this genuinely reflects a tentative sign of easing, but for the time being deposit constraints remain tight in all areas of lending."

However, for home movers with bigger deposits, low rates have made mortgages initially very affordable. The CML said home movers in March needed less than 10% of gross income to cover their mortgage interest payments, unchanged from February and the lowest amount since the CML started recording this data in 1974.

First-time buyers have not seen quite as much benefit, reflecting the fact that the best deals are available only to those with larger deposits. Even so, in the first three months of 2010, they needed just 13.3% of their income to cover their interest payments, the lowest since 2004.

Michael Coogan, director general of the CML, said: "Today's figures indicate there is currently some momentum to house purchase lending, but for the sake of the future health of the housing and mortgage markets, the new government will need to focus on the critical issue of funding and how to address the issues arising from the repayment of the emergency support provided during the financial crisis. The UK is at risk of a chronic under-supply of credit – and the rationing of mortgages for customers – for years to come."

Source: ' Guardian '

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