Home movers spend least on mortgage interest since 1975
Mortgage borrowers who moved home in May saw their mortgage interest payments accounting for the lowest proportion of income since the Council of Mortgage Lenders (CML) began collecting data, in 1975.
CML members made 27,100 loans to home movers, up 19% on a year earlier, while the proportion of income spent on mortgage interest stood at a typical 9.5%, down from 11.98% in May 2009.
Furthermore, there were 14,800 first-time buyers in May, the figure having risen 8% year-on-year and 2% on April.
Those getting a foot on the property ladder borrowed an average of 3.14 times their income and 75% of the value of their property, but interest payments accounted for only 13.2% of average income, the lowest proportion since March 2004.
Remortgaging activity recovered a little in May with the 26,000 loans advanced and the total up 6% on a year earlier.
Looking to the future the CML sees the challenging economic backdrop, government spending cuts and forthcoming tax increases as likely to have a negative impact on its figures in the second half of 2010.
The body warns that monthly comparisons with a year earlier will probably be near zero, or negative, because of improvements seen in the second half of 2009, as the stamp duty holiday came to an end.
CML director general, Michael Coogan, comments: “Our forecast for gross lending in 2010 may now be looking a little optimistic.”