House purchase lending rises as mortgage costs fall
The Council of Mortgage Lenders (CML) has reported that house purchase lending accounted for 35% of all mortgage lending in March, up from 31% in February and the highest proportion since December 2007.
First-time buyers put in a stronger presence, accounting for 40% of house purchases, up from 38% in February.
However, the number of first-time buyers remained low at 12,500, compared to 17,800 in March 2008 (not seasonally adjusted).
The average first-time buyer borrowed three times their income and 75% of their property’s value, with the figures unchanged from February.
While remortgaging showed an 8% rise, the proportion was down 45% year-on-year, largely as a result of borrowers remaining on their lenders’ relatively attractive standard variable rates when fixed-rate deals end.
According to the CML, both first-time buyers and home movers are benefiting from the lowest debt servicing costs since 2004, with monthly interest payments equating to an average 15.1% of income in March.
The body’s head of research Bob Pannell comments: “Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can’t.”
He adds: “For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years … but for those without substantial deposits, entering the market is still both difficult and uncertain.”