Mortgage lending crept up from £5.2bn in March to £5.4bn in April – slightly above the sixth-month average of £4.9bn. Mortgage loan approvals, which indicate future lending volumes, also rose by 9 per cent in April compared to March, the British Bankers' Association (BBA) has revealed. This is .due to a jump in the number of people remortgaging, rather than buying property. While tight lending criteria and pressure on household finances continue to curb new property purchases, the same pressure is forcing more existing borrowers to switch mortgage and/or provider to get a better deal.
Property prices slumped by 2.5 per cent in May, according to the latest figures from Nationwide Building Society's monthly house price index. This is the biggest fall recorded since the index began .in 1991 and represents the longest period of decreasing values, as prices have now dropped for seven consecutive months. But at £173,583, the average house price is still 5 per cent higher than two years ago and 10 per cent higher than in 2005. The worst affected will be those who bought property recently and need to move home or raise finance against their house.
GO FIGURE... 23%
The percentage of homeowners relying on an inheritance to pay off their mortgage. A survey by engage Mutual Assurance reveals that almost a quarter of people will only be able to clear their debt if they inherit money. By the late Nineties, most borrowers opted for capital and interest-type mortgages, where repayments consist of interest and capital, so that the mortgage is repaid at the end of the term. But with growing mortgage sizes, by last year, over a quarter of borrowers chose interest-only loans, where repayments are lower but the capital is owing at the end of the term and a lump sum is needed to pay it off.
Paula John is editor-in-chief of Your MortgageReuse content