From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

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Mortgage market shows signs of life - despite euro uncertainty

News

Published: 18 October 2011 | Author: Bernard Clarke

Recent lending figures showed welcome signs of life in the UK mortgage market, despite continuing uncertainty in the euro zone. House purchase lending to first-time buyers and movers – as well as remortgaging – all saw an increase in activity in August.

The number of loans to first-time buyers totalled 19,000, worth £2.4 billion, an increase over July of 5% by number and 4% by value. Compared with a year ago, meanwhile, the value of lending to first-time buyers was 9% higher.

For movers, lenders advanced 33,000 loans in August, worth £5.5 billion, an increase over July of 8% by number and 10% by value. Lending to both first-time buyers and movers was at its highest for over a year.

Remortgaging showed a similar month-on-month increase. Lenders advanced 34,100 remortgage loans, worth £4.2 billion, 9% higher by number and 5% by value than in July. But perhaps the most striking comparison was with remortgaging a year ago, with activity 30% higher than in August 2010.

Lending criteria for first-time buyers and movers showed little change. But the continuing decline in borrowing costs meant that, while movers continued to pay an average deposit of 31%, their monthly mortgage payments dropped to 9.4% of their income – the lowest proportion since monthly records began in 2002.

First-time buyers continued to pay an average deposit of 20% of the value of the property. Typically, they borrowed 3.2 times their income, up slightly from 3.17 times income in July.

With those moving house now paying a record low proportion of their income in mortgage interest, it is clear that the low rate environment is continuing to benefit borrowers, despite the persistence of a gloomy backdrop in the wider economy.