CML: Mortgage lending falls in August

| October 12, 2009 | 0 Comments
CML: Mortgage lending falls in August

The Council of Mortgage Lenders (CML) has today revealed a slight fall in the number of home loans for house purchase in August.

According to the CML, there were 53,000 new mortgages granted in August compared to 56,000 in July.

While the figure represents a 5% fall on the month, the figure represents a 30% rise when compared with August last year.

The CML said of the total, 19,200 loans were to first-time buyers, while 33,400 went to people moving house. First-time buyers remain at low levels as they are still required to put down a hefty deposit of 25% in order to secure a mortgage.

In the meantime, remortgaging remained at low levels as borrowers opted to stay on standard variable rates with interest rates are at record lows, said the Council.

Commenting on today’s figures, CML’s economist Paul Samter, said: “House purchase activity has revived from its moribund state at the beginning of the year.”

“It will be a drawn out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing,” he added.

“But remortgaging demand has fallen away in the low interest rate environment and this is dragging down gross lending levels overall,” concluded Mr Samter.

Remortgaging will no doubt continue to hover around low levels after influential think tank, the Centre for Economics and Business Research (CEBR), said over the weekend that interest rates will remain at their current historic level of 0.5% until 2011.

Meanwhile, rates will not reach 2% until 2014 as a result of the severe fiscal squeeze on the UK economy which will result in tax rises and spending cuts, said the CEBR.

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