Mortgage lending for house purchases rises 16%
There was a 16% jump in mortgage lending to people buying a new home during April, further adding to evidence that the housing market is beginning to stabilise, figures showed today.
A total of 35,600 loans were advanced to people for house purchase during the month, the highest level since October last year, according to the Council of Mortgage Lenders.
The upturn builds on a recent run on positive data on the housing market, as buyers are tempted back by record low interest rates and recent house price falls.
But the CML cautioned that despite the recent pick up, the number of mortgages for house purchase were still 28% lower than they had been 12 months earlier, while they were well down on the average of 88,000 loans advanced for people buying a home in April during the past seven years.
Bob Pannell, CML head of research, said: "There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices."
In a further positive sign, the number of first-time buyers taking out a mortgage increased for the third month in a row to 13,500, the highest level since October last year, when the credit crunch intensified following the collapse of US investment bank Lehman Brothers.
First-time buyers continued to put down an average deposit of 25%, while they borrowed 2.96 times their income, down slightly from 2.99 times in March.
The CML said the slowdown in the rate at which these measures are worsening, combined with the recent launch of a number of mortgages for people with smaller deposits, may indicate that lenders are beginning to loosen their criteria.
The figures come just days after Communities and Local Government said house prices rose by 1.1% in April, while the Royal Institution of Chartered Surveyors said inquiries from new buyers increased for the seventh month in a row during May to reach their highest level since August 1999.
Both Nationwide and Halifax also recently report price rises during May of 1.2% and 2.6% respectively.
But despite the increasingly positive signs, economists are continuing to warn that house prices are likely to still have further to fall due to the current economic downturn and the ongoing problems in the mortgage market.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The CML mortgage data add to the mounting and now widespread evidence that house price activity is picking up in response to the substantial fall in house prices from their 2007 peak levels and markedly reduced mortgage rates.
"Nevertheless, this has to be put into perspective. Housing market activity is still very low by long-term norms.
"Indeed, despite the recent pick up, mortgage activity is still down at a level that is normally associated with falling house prices."
He said IHS Global Insight still expected house prices to fall by a further 10% between now and the middle of 2010, although he added that this forecast could turn out to be too pessimistic if the economy sustains its recent improvement.
The number of people remortgaging continued to decline during April, dropping by 22% compared with the previous month to 31,000.
The remortgage market has been stifled by a combination of lower reversion rates for people coming to the end of a deal, and the high equity stakes being demanded by lenders in order for people to qualify for their best rates, which is making it difficult for some homeowners to switch loans.
The steep fall in remortgaging helped drive down the total value of all mortgage advances to £10.5 billion, compared with £11.5 billion in March.
The take-up of fixed rate mortgages continued to increase as borrowers hoped to lock in at a low rate before interest rates start to rise again.
Around 69% of all borrowers took out a fixed rate deal during April, the highest level since June 2008.
First-time buyers now typically spend 15% of their pay on mortgage interest, the lowest proportion since May 2004, while homemovers spend 11.3% of their income on it, a level last seen in November 2003.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Liam Neeson's Downton dreams
- 2 Scottish independence live: Scotland gives a clear 'No' in historic referendum - as it happened
- 3 iOS 8 is full of shiny new features - but it's terrible news for app developers
- 4 Friends 20th anniversary: Six things we wouldn't have without influential comedy series
- 5 Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize