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June 17, 2010    

First-time buyer mortgage advances lowest since 2007

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by Gill Montia

First-time buyers accounted for only 35% of all house purchase loans in April 2010, the lowest proportion since September 2007.

According to the Council of Mortgage Lenders (CML), the low market share is linked to the need for substantial deposits.

The lenders’ body comments: “Although there has been some increase this year in the number of higher loan-to-value products available, this has not yet translated into a sustained increase in loans to borrowers with lower deposits.”

Overall, there were 40,000 loans advanced for house purchase in April, worth £5.7 billion.

The figures are down from 45,000 worth £6.3 billion in March but up from 35,000 worth £4.5 billion a year earlier.

An April dip had been expected due to the Easter break, and the underlying trend is of a gradual recovery in house purchase lending, the CML reports.

Turning to remortgaging activity, the downward trend continued in April, with 24,000 remortgage loans advanced worth £2.9 billion, down 16% in volume and 17% in value from March.

Commenting on the figures, CLM director general, Michael Coogan, says: “Lending for house purchase still looks modestly positive compared to 2009.”

He adds: “But there remain a number of significant risks to this – in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income.”

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