CML: Mortgage lending up in April

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by Kay Murchie

There is more positive news today for the housing market after the Council of Mortgage Lenders (CML) said the number of loans approved for house purchases in the UK rose by 16% in April compared with March.

According to the CML, a total of 35,600 loans were advanced to people for house purchase during April - the highest figure since October 2008.

While the figures add to further reports of a recovery in the housing market, it must be noted that the figure is still almost 30% down compared with April 2008.

Furthermore, mortgages are still hard to secure with the average deposit required by first-time buyers at an average of 25%.

The figures add to a raft of good news this week for the housing market as buyers are being lured back to the market by record low interest rates and improved affordability as house prices fall.

Meanwhile, in January, almost half of new mortgages were fixed-rate deals but this proportion increased to 69% in April.

Bob Pannell, CML head of research, comments: “With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of five to 10 years.”

“With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable-rate deals.”

Mr Pannell adds: “There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices.”

Finally, the number of people remortgaging fell to 31,000 in April - down 22% compared with March and 65% compared with a year earlier. This figure suggests people who are coming off fixed-rate deals are opting to stay on the standard variable rate, due to historically low interest rates.