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House purchase lending up 4 per cent while remortgaging falls

Lending for house purchases has increased by 4 per cent to 52,700 in May but remortgaging has dropped by 14 per cent, according to new statistics from the Council of Mortgage Lenders.

House purchase loans increased by 2 per cent in value to £7.9bn, but both volume and value were 44 per cent lower than May last year.

Remortgaging saw a big drop, decreasing to 71,000 loans in May. This is down 14 per cent from April and 23 per cent from May 2007.

The value of remortgage lending declined by 13 per cent in May to £9.6bn, which represented 39 per cent of all lending compared to 42 per cent in April.

The number of loans to first time buyers rose by 4 per cent from April to 19,200. This was down 41 per cent from May last year.

Home-movers took out 33,500 loans, up 4 per cent from April and down 46 per cent from May last year.

Gross lending declined to £24.5 billion, down 6 per cent from April and 22 per cent from May last year. This is the seventh consecutive month that gross lending has been lower than its position a year before.

The CML says take up on fixed rates has increased. In May they accounted for 66 per cent of all new loans, up from 59 per cent in April.

CML director general Michael Coogan says: “The growing popularity of fixed-rate mortgages, despite the relatively high rates, suggests that many borrowers are prioritising certainty in their monthly payments.

“Lending levels continue to be lower than last year and any recovery is still some way away, with little sign of the special liquidity scheme increasing the flow of funds to the industry or lowering the cost of funds as hoped. We look forward to an early, positive report from the Crosby review on how the market should address these issues with the support of the tripartite authorities “

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