Remortgaging continued to increase in August, according to the Council of Mortgage Lenders (CML).
With 34,100 loans taken out (worth £4.2 billion), both the volume and value were more than 30% higher than August 2010.
House purchase lending also rose in August. There were 52,000 loans advanced (worth £7.9 billion), up from 48,700 (worth £7.2 billion) in July and from 51,000 (worth £7.7 billion) in August 2010.
House purchase lending is spread across both first-time buyers, and home movers and both contributed to the rise. The number of loans to first-time buyers rose 5% both from last month and August last year, while the value rose by 4% from July and a larger 9% from August 2010. Home movers took out 33,000 loans in August (worth £5.5 billion), an 8% increase (10% by value) on July and up 1% (2% by value) from August 2010. Lending to both first-time buyers and home movers was at its highest for over a year.
Lending criteria for both groups in August showed little change from the previous months. First-time buyers continued to put down on average 20% of their property’s value as a deposit and borrowed 3.20 times their income, slightly up from 3.17 times in July. Typical deposits for home movers stayed at 31% for a second month but in August home movers on average paid 9.4% of their income on mortgage interest payments – the lowest since monthly records began in 2002. This is likely to reflect the low interest rates currently available to borrowers with a large amount of equity, typically home movers.
96% of first-time buyers in August took out a repayment mortgage, unchanged from July and out of 33,000 home movers, 82% (26,900) did the same, up from 80% in July. As existing first-time buyers themselves begin to move home or remortgage, the likelihood is that they will retain a preference for repayment mortgages which will increase the overall popularity of this type of business, the CML said.
Paul Smee, director general of the CML, said: “Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone
