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£40bn worth of mortgages in the pipeline, says FSA

Lenders have agreed to advance £40bn worth of mortgages in the coming months, according to the FSA’s latest mortgage lending data.

The statistics show that in Q2 2011, new commitments – the amount of new lending that lenders have agreed to advance in the coming months – totalled £40bn, 13 per cent up on Q1 but 3 per cent down on Q2 2010.

It also reveals that new advances, or gross lending, in Q2 totalled £37bn, 11 per cent higher than in Q1 and almost unchanged on the amount advanced in Q2 2010.

The breakdown of the purpose of new lending shows a rise in lending for house purchase but a decline in remortgage business.

The proportion of lending for house purchase, which includes buy-to-let purchases, increased from 54 per cent in Q1 to 59 per cent in Q2, while the proportion of lending to first-time buyers rose from 14 per cent in Q1 to 16 per cent in Q2.

Gross advances for house purchase also increased in value terms, up by 22 per cent on Q1’s figure to reach £21.6bn.

Remortgage business fell from 38 per cent of new lending in Q1 to 34 per cent in Q2, but remains above the 30 per cent it accounted for in Q2 2010.  

The data also shows a rise in buy-to-let lending, with the proportion of new lending for buy-to-let increasing in each of the last three quarters to account for 8.9 per cent of overall residential lending in Q2.

In value terms there was a 19 per cent increase in Q2 over the amount advanced in Q1 and at £3.2bn this was the largest quarterly amount lent since Q4 2008.

In terms of the total outstanding loan book, the proportion of buy-to-let loan balances has also been increasing over the last few quarters and now stands at 12.08 per cent, the highest percentage since the series started.

In addition, the proportion of new lending at fixed rates increased again in Q2 to 56 per cent, up from a low of 37 per cent in Q1 2010.

The average rate on new advances rose from 3.65 per cent in Q1 to 3.81 per cent in Q2, which the FSA puts down to the increase in fixed rate lending and a rise in the average fixed rate from 4.24 per cent in Q1 to 4.43 per cent in Q2.

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