Mortgage lending slightly higher in February

Mortgage lending was slightly higher in February, according to the latest data from the Council of Mortgage Lenders (CML).

Compared to January, the number of mortgages for house purchase rose 4% in February, to 24,300.

This however was still a 47% drop compared to February 2008.

Home mover mortgages also rose 3% in February, compared to January but again this was a 48% drop compared to February 2008.

The majority of the new loans were fixed rate mortgages.

There was a fall in the percentage of tracker mortgages taken, from 38% in January to only 31% in February.

CML director general, Michael Coogan, said ‘We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year.’

He added ‘We need further market measures to be introduced by the government around the Budget to encourage a mortgage market where all types of lenders – banks, building societies and specialist lenders, and large and small businesses – are encouraged, and enabled, to commit more funds to the mortgage market if we are to enhance lending activity significantly.’

The number of remortgages dropped by 20% in February, down to 35,000 remortgages from 44,000 in January.

The CML expect the demand for remortgages to remain low as long as lenders’ standard variable rates are more attractive compared to new mortgage prices.

This is particularly so for those with limited equity available due to the continuing fall in house prices. These borrowers are often excluded from the best remortgage deals offered by lenders requiring large deposits.