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Mortgage affordability remains resilient


by Gill Montia
January 9, 2008
”Mortgage

The Council of Mortgage Lenders has published data indicating that in November, affordability in the mortgage market continued to show some resilience to the credit squeeze.

During the month, income multiples fell slilghtly with first-time buyers typically borrowing 3.33 times their income, as compared with a multiple of 3.39 in August.

The average homebuyer borrowed 3.02 times income, a figure that has remained steady since August of last year, when it peaked at 3.04.

Expectations of further reductions in the base rate meant that the proportion of borrowers taking out fixed-rate mortgages fell for the fifth successive month in November. The figure was down to from 68% in October, to 65%.

This trend is expected to continue as borrowers anticipate further rate reductions in early 2008.

In November, total gross lending stood at £30 billion, down 10.4% on October (£33.5 billion) and 9.6% on November 2006 (£33.2 billion).

Loans for house purchases totalled 80,000, a 3.1% decrease on October (83,000).

November remortgages declined significantly, to 73,000, a 21% drop on October (93,000).

The figure could indicate that large numbers of borrowers at the end of their fixed-rate loans chose to stay with their existing lenders, possibly because of the offers available.

The director general of the CML, Michael Coogan, comments: “At a time of global market uncertainty, business levels in the mortgage market are holding up reasonably well in the UK despite funding constraints. There are mixed signals on inflationary pressures here which will make the Monetary Policy Committee’s decision finely balanced, but consumer confidence would be further underpinned by another rate cut this week.”

A January cut in the base rate will, of course, only immediately benefit borrowers with base rate tracker rate mortgages.



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