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The mortgage business is flatlining as buyers, sellers and lenders wait for the property market to jump start.
The latest property market statistics show fewer buyers are in the market and this is affecting sales and mortgage advances.
Coupled with this, imminent fears of interest rises have subsided, with remortgage advances plunging by more than a quarter in April.
House prices in England remained unchanged for the year ending April 30, 2011, according to the Communities and Local Government Department housing index. Changes in prices were at fractions of 1%.
The Council of Mortgage Lenders revealed banks and building societies loaned £5.9 billion to 40,900 borrowers for home purchase in April – up 8% from March but down 2% on lending in April 2010.
The split was 25,100 loans to movers and 15,800 to first-time buyers.
Borrowing leaves first time buyers with less income than movers – their loans were at an average 80% of the property’s value taking 13.3% of income compared with an average 69% loan-to-value for movers, taking 9.7% of their income.
First time buyers are also shunning interest-only mortgages, with only 4% opting for interest only last month compared with 30% in 2008.
Remortgages showed the biggest change, says the CML, with the number of loans down 27% from 34,100 in March to 24,700 in April. Lending was down 28% to £3 billion against £4.1 billion in March.
The CML warns mortgage lending is likely to remain subdued as fewer homes are completing and homeowners are not so keen to remortgage as rate rise concerns have quelled.
Michael Coogan, CML director general said: “The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011.
“The economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months.”
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