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Lending up for April due to remortgaging says CML

Lending volumes increased by 8 per cent in April, to £26.1bn from £24.1bn in March, although activity remains weaker than a year ago, according to the Council of Mortgage Lenders.

The increase comes after two consecutive months of decline and while the figures were still 5 per cent down on the same time last year, lending in March dropped a much higher 24 cent compared with March 2007.

Remortgaging accounted for 42 per cent of gross lending in April and has continued to perform better than house purchase as large numbers of borrowers exit fixed-rate mortgages. There were 83,000 loans for remortgage worth £11bn, up 14 per cent in volume and 11 per cent in value from March.

There were 50,700 loans for house purchase worth £7.7bn in April, up 9 per cent in volume and 10 per cent in value from March. First-time buyers took out 18,500 loans, up 4 per cent from March but 36 per cent fewer than in April last year.

Five per cent more borrowers took out fixed-rate products in April than in March, rising from 54 per cent to 59 per cent. This is the largest proportion since December last year.

The average first-time buyer put down a deposit of 13 per cent, the highest level in over three years. First-time buyers typically took out loans for 3.3 times their income, down from 3.35 in March and the average home mover loan was 2.96 times their income, down from 3 in March.

Director general Michael Coogan says: “Monthly house purchase lending volumes continue to be lower than last year’s levels and there will be a further weakening in coming months as recent approvals data has shown. The squeeze on mortgage funding has led many lenders to tighten their lending criteria. While tighter criteria make it more difficult for some borrowers to obtain a mortgage, they also reduce risk in a slower housing market. There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished.”

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