Lenders expect decline in home loan volumes to continue
The Council of Mortgage Lenders (CML) has reported that completed loans for house purchases increased by 4% in volume from April to May, to 52,700.
The total value of mortgages grew by 2% in May, to £7.9 billion, but remained 44% below the figure for May 2007.
Meanwhile remortgaging business fell sharply during the month declining to 71,000 in volume: 14% down on April and 23% below May 2007.
The total value of remortgage lending fell 13%, to £9.6 billion. The figure represented 39% of all lending, compared with 42% a month earlier.
Loans to first-time buyers rose by 4% from April to May but still stood 41% behind May 2007, at 19,200.
This group of purchasers typically borrowed 3.3 times income, compared with 3.39 in July of 2007 when the ratio was at its peak.
Gross lending declined for the seventh consecutive month, to £24.5 billion, down 6% from April and 22% year-on-year.
The majority of borrowers taking out new loans opted for security in May, with a 7% rise in the take-up of fixed-rate mortgages.
Fixed-rate products accounted for 66% of all new loans in May, up from 59% in April.
The CML’s director general, Michael Coogan, expects lending levels to continue to be lower than last year and that the situation worsen before it gets better, as first-time buyers are prevented from entering the market by lenders’ demands for sizeable deposits and the need for a good credit rating.
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