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Mortgage market stirs from January slump

Mortgage market stirs from January slump

Category: Mortgages

Updated: 11/04/2011
First Published: 08/04/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The mortgage market has stirred from a particularly downbeat January, although activity remains down year-on-year.

Thirty-two thousand new loans were agreed for house purchases in the month, worth £4.6 billion, up 8% by volume and 5% by value from January, but down 12% by both volume and value from February 2010, figures from the Council of Mortgage Lenders (CML) show.

The amount of people looking to remortgage also rose in the month – a trend that is expected to continue as the likelihood of a rise in interest rates grows stronger.

Some 24,300 loans were given for remortgaging, up on both a monthly and annual basis.

The CML said that stronger remortgage figures in the coming months are probable, commenting: "The Bank of England's large increase in remortgage approvals in early 2011 has not yet fed through to completions but is expected during the next few months."

Increases in loans to first time buyers contributed to a boost in house purchases lending.

First time buyers made the largest contribution with 12,400 loans (worth £1.4 billion) in February, borrowing on average 80% of their property's value for the second month in a row.

The 3.11 times their income that they borrowed is the lowest income multiple seen since August 2009.

"The February fall in lending compared to last year was despite the fact that lending in the early months of 2010 was itself depressed following the end of the earlier stamp duty concession," said Bob Pannell, CML chief economist.

"But research suggests cash purchases have remained steady since the credit crunch, indicating that the housing market may be holding up better than the low mortgage lending levels suggest.

"We are likely to see a continuing increase in remortgage activity this year, especially if and when rate rises occur."

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