Mortgage Borrowing Is On The Rise

According to the lates figures from the Council of Mortgage Lenders (CML), the number of mortgages and loans for house purchase in March 2010 was up 25% from February.

House purchase lending increased by 45% year on year in March, making this the ninth consecutive month of year on year growth.

On a quarterly basis, the number of mortgages was down compared to the last quarter of 2009, although this cannot be used to draw any conclusions as there was great distortion caused by the end of the stamp duty holiday in December.

First time buyers borrowed an average of 76% of the property price. This was for the second month running, making it the first time average deposits for first time buyers have been lower than 25% for more than one month since January 2009.

Deposit constraints remain tight in all areas of lending but maybe this is a first tentative sign that things are easing.

Michael Coogan, director general of the CML, commented “Today’s figures indicate there is currently some momentum to house purchase lending, but for the sake of the future health of the housing and mortgage markets, the new government will need to focus on the critical issue of funding and how to address the issues arising from the repayment of the emergency support provided during the financial crisis. The UK is at risk of a chronic under-supply of credit – and the rationing of mortgages for customers – for years to come.”

March saw only 46% of new loans as fixed rate mortgage deals and 37% as tracker rate deals.

The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion.