CML: Mortgage lending increases in August

| October 11, 2011
”CML:

The Council of Mortgage Lenders (CML) has today reported the number of loans for house purchase rose in August.

According to the Council, there were 52,000 loans advanced for house purchase (worth £7.9 billion) in the month – up from 48,700 (£7.2 billion) in July.

The Council described today’s figures as “welcome signs of life” as the mortgage market has been struggling since first-time buyers have to put down an average deposit of 20% in order to secure a mortgage.

With house prices edging higher for the year to date, the average new mortgage has gone back up to £120,000, the CML said, meaning affordability also remains a major issue for first-time buyers.

The Council highlighted that mortgage activity is expected to remain weak due to uncertainty surrounding the UK and European economies.

Commenting on today’s figures, Paul Smee, director-general of the CML, said: “Even though it is impossible to ignore the knocks to confidence emanating from the euro zone, August lending showed welcome signs of life.

“With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy,” he added.

Meanwhile, remortgaging also edged higher in August, with 34,100 loans worth £4.2 billion approved – a rise of 30% when compared with August 2010, the CML said.

Remortgaging has remained subdued during the historically low interest rate environment but soaring inflation over the last few months has led to speculation that interest rates will be lifted.

In other news today, official data from the Department for Communities and Local Government (DCLG) revealed UK house prices rose by 0.6% in August compared with July.

However, on an annual basis, house prices are 1.3% lower, taking the average UK house price to £208,476, according to the DCLG.

Also today, the Royal Institute of Chartered Surveyors said “fears over the economy continued to impact negatively on the housing market” with fewer properties being put up for sale in September.

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