New home loan approvals up 14%

New home loan approvals up 14%

The Council of Mortgage Lenders has reported that 39,900 loans for house purchases were approved in October, 14% more than in the previous month.

First-time buyers secured 15,400 loans and home movers 24,500. The value of lending was up 10% on September, totalling A?5.5 billion.

However, both volume and value were down year-on-year by 52% and 57% respectively.

October remortgage approvals rose to 70,000 and were worth A?9.4 billion, representing an increase of 12% in volume and 11% in value on September.

Annually both figures declined: 31% for volume and 28% for value.

Gross lending increased 6% on September, to A?18.6 billion, but was 44% below the level seen in October 2007.

Both loan-to-value ratios and income multiples declined as a result of falling house prices and tighter lending criteria.

The average first-time buyers borrowed 83% of the propertya��s value and 3.10 times income, down from 84% and 3.18 in September.

Home movers typically borrowed 68% of the propertya��s value and 2.73 times income, down from 71% and 2.73 in September.

In October, interest payments averaged 19.3% of a first-time buyera��s income, down from 19.7% in September; home movers spent an average 16.1% of their income on interest payments, down from 16.9% in September.

Commenting on the data, the CML’s director general, Michael Coogan, described the Government’s policy objectives as “conflicting and incoherent”, referring to the need for lenders to recapitalise and demands that they should increase lending.

On further cuts in the Bank of England’s base rate, Mr Coogan explained that the response of each lender will depend on its access to, and the price of, its funding.

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  1. I think the home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills or college education. A home equity loan creates a lien against the borrower’s house, and reduces actual home equity.
    Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end.Nice blog.