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.

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence