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Wednesday 15th of October 2008
October 14, 2008

Mortgage volumes and lending at all time lows


by Gill Montia
Mortgage volumes and lending at all time lows

The Council of Mortgage Lenders (CML) has reported a further fall in mortgage lending, in August.

During the month, 42,200 loans were agreed for house purchases, with first-time buyers making up 15,600 of that number.

Total lending for house purchases declined to £6 billion, 63% down on the same period in 2007.

During the month, both the volume and value of house purchase loans were at their lowest levels since the CML began collecting monthly figures, in January 2002.

First-time buyers borrowed just under one-third of total August house purchase lending, at £1.9 billion; the average amount borrowed fell to £106,754, the lowest sum since May 2006.

Those entering the property market for the first time typically borrowed 84% of their property’s value and 3.18 times income, down from 90% and 3.39 respectively, during the same month of 2007.

Meanwhile, home movers accounted for 26,600 loan approvals, worth £4.1 billion. Year-on-year, the figures represent a 61% decline in volume and a 64% fall in value.

The average home mover borrowed £126,000 or 69% of the value of their property. The average income multiple stood at 2.78.

Remortgage approvals totalled 74,000 worth a collective £10 billion, reflecting annual declines of 20% for volume and 9% for value.

The CML’s director general, Michael Coogan, is confident that the measures announced yesterday to recapitalise the UK’s banks will have a positive effect but says the benefits will take time to feed through to the mortgage market.

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