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Lending taken to new high by record remortgaging

Mortgage lending reached a new peak in April with gross advances totalling £16.9bn, up from £16.1bn in March and a big rise on £11.6bn in April 2001, according to the Council of Mortgage Lenders.

The value of loans for house purchase fell slightly to £8.8bn in April, or 52 per cent of gross advances, from £9bn, or 56 per cent of gross advances, in March. This figure was £7.4bn last April. The number of loans for house purchase dropped to 108,000 from 111,000.

Remortgaging continued to grow, reaching a new record of £6.9bn, 41 per cent of advan-ces, doubling last year&#39s figure of £3.4bn and up from £6bn or 37 per cent of advances in March.

The average rate of interest increased slightly to 4.73 per cent from 4.68 per cent the previous month. The annual variable rate rose to 4.56 per cent from 4.43 per cent but the average fixed rate fell to 5.12 per cent from 5.27 per cent.

The survey says affordability for first-time buyers was similar to March with advances averaging 79 per cent of the property&#39s value or 2.51 times the borrower&#39s income. Existing owner-occupiers moving house borrowed on average 2.38 per cent of their income.

CML director general Michael Coogan says: “Mortgage and housing markets have been more buoyant than expected this spring but we expect them to slow later in the year, particularly if there is a modest rise in interest rates in the coming months.

“For the vast majority of borrowers, mortgages will remain affordable, even if mortgage costs rise.”

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