"Mortgage lending is up, but not up to last year"
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.