Mortgage lenders released the purse strings on home loans slightly in August, but this year looks unlikely to equal last year’s lending.
Remortgaging was up significantly, with 34,100 loans worth £4.2 billion, making both the number of loans and amount borrowed were more than 30% higher than August 2010.
The number and total value of home buyer loans also hit a high for 2011, with 52,000 mortgages worth £7.9 billion.
Nevertheless, lending for the year so far stands at just 329,000 loans to buy homes worth £48 billion when the totals for 2010 were 513,000 loans worth £75 billion. Lenders will have to advance substantially more funds for the rest of the year to reach last year’s levels.
The lack of home sales is reflected in a rising number of remortgages throughout the year.
Although the Council of Mortgage Lenders (CML) reports a massive increase in August, their statistics show that last year’s 865,000 remortgages worth £118 billion is unlikely to be matched, with this year’s totals currently standing at 230,000 remortgages worth £28 billion.
Paul Smee, director general of the CML, said: “Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone, August lending showed welcome signs of life. With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy.
“Lending to both first-time buyers and home movers was at its highest for over a year.”
The outlook for first time buyers even bleaker as just 19,000 mortgages worth £2.4 billion were agreed in August – up 5% on July and 5% on 12 months earlier.
Most home buyers opted for repayment mortgages.