Mortgage lending up 5%

Remortgaging and first-time buyers responsible for continued rise

Alex Johnson
Thursday 13 June 2013 12:53
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Gross mortgage lending rose by 5 per cent in April, according to figures released today by the Council of Mortgage Lenders.

A total of £3.4 billion was lent to borrowers remortgaging in April, up by 10 per cent compared to March. First-time buyers took out 19,400 loans worth £2.5 billion in April, down one per cent on March though this figures is distorted by the effect of the end of the stamp duty concession on lending in March and April last year.

Indeed, first time buyer activity in the first four months of this year (70,700 loans) is 11 per cent higher than the same period last year and first-time buyers continue to account for an increased proportion of all house purchase loans. Around 46 per cent of all house purchase loans in April went to first-time buyers, a figure unchanged from March.

Peter Williams, Executive Director of the Intermediary Mortgage Lenders Association (IMLA), said: "The five per cent increase in gross mortgage lending reported today can be largely attributed to a rise in remortgage activity  with little change in relation to house purchase lending and home movers. However, first-time buyers continue to dominate and are accounting for a growing proportion of the mortgage lending total. Despite witnessing a one per cent fall in the number of loans taken out by first time buyers, the typical amount borrowed has increased, meaning that the overall value of loans has remained at the same level as this time last year.

"Despite the fact that the Help to Buy mortgage guarantee scheme has not yet been introduced these figures show that lenders are already offering a helping hand to first time buyers with small deposits."

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB) said: "Gross mortgage lending blossomed this spring as a wealth of mortgage products and increasingly attractive mortgage rates arrived on the market. New buyers and homeowners alike have been keen to make the most of the great deals of offer, with a flurry of activity in the both remortgaging and first-time buyer arenas. Strong first-time buyer activity is particularly heartening."

Mark Harris, chief executive of mortgage broker SPF Private Clients, added: "Growth in the housing market is steady rather than spectacular and certainly not back at the levels seen at the height of the housing boom. Remortgaging gained some ground in April but one would still expect to see more of this, given the rock-bottom mortgage rates now available. It may be that borrowers are sat on attractive reversion rates or standard variable rates so don't wish to remortgage, or are trapped because of tighter criteria or lack of equity in their homes so can't switch. There may also be borrowers holding out for even better rates. However, borrowers should look at rates in an historical context - these are the cheapest rates ever seen and even if they do edge a little lower, snapping one up now might be a good move. Don't assume they will be around for ever."

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