New mortgage lending up 4%

The Council of Mortgage Lenders (CML) has reported a 4% rise in mortgage approvals for house purchases in February.

During the month 24,300 loans were sanctioned worth a combined £3.1 billion.

The figure compares with 23,400 loans in January worth £3.1 billion but is around one-third of the average February total of 76,000 between 2002 and 2007.

Remortgaging approvals fell by 20% to 35,000 in February, down from 44,000 a month earlier.

The CML says it expects remortgaging demand to remain “muted” on two counts: firstly because cuts in the Bank of England’s base rate mean that lenders’ standard variable rates are attractive and secondly because some remortgagers are unable to meet the loan-to-value criteria attached to new deals.

Loans to first-time buyers rose a monthly 7% in February, to 9,400 but remained well below the 17,400 approvals seen in February of last year.

First-time buyers typically put down a deposit of 25% reflecting the tight lending criteria that are excluding the majority of potential first-time buyers.

The average first-time buyer loan stood at £95,000, down from £97,000 in January and £114,000 in February of last year.

Those getting a foot on the property ladder borrowed an average 2.95 times income, down from three times in January.

Meanwhile, interest payments accounted for 15.4% of the average first-time buyer’s income in February, down from 20.1% a year earlier and the lowest proportion since June 2004.

CML director general, Michael Coogan, comments: “Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own.”

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