Mortgage lending to remain “stable but small”
New mortgage lending showed a month-on-month fall of 4% in October, with 46,000 loans for house purchases advanced, according to the Council of Mortgage Lenders (CML).
At £6.7 billion, the value of the advances was down 6% on September and 12% on October 2009, although last year’s figure was bolstered by buyers taking advantage of the stamp duty holiday.
There were 17,000 loans to first-time buyers, down 5% from September and 19% from a year ago, and remortgaging showed a similar pattern, with 26,000 loans advanced, down 9% from September and down 21% from October 2009.
Home movers were similarly affected, with the 29,400 loans advanced representing a 3% drop from September, and a 14% reduction when compared to October 2009.
However, loan-to-value ratios eased in October, with the typical first-time buyer borrowing 80% of a property’s value, up from 76% in September.
Also of note, 93% of first-time buyers took out a repayment mortgage, the highest proportion since records began in 1974.
Stricter lending criteria have resulted in a shift away from a pre-2007 norm of around 30% of first-time buyers opting for interest-only mortgages.
Commenting on the figures, CML director general, Michael Coogan, says: “With 2009 lending levels artificially inflated by the end of the stamp duty holiday, we expected to see a decline in lending year-on-year, so today’s figures are not surprising.”
He adds: “Consumer confidence has also been affected by October’s spending review, despite the relative affordability of monthly mortgage payments, and so a stable but small lending market will continue for some time to come.”