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Mortgage lending increases 8% in February

Mortgage lending increased by 8 per cent in February after a subdued January, according to the Council of Mortgage Lenders.

There were 32,300 loans for home purchases in February, worth £4.6bn, up from 29,800, and £4.4bn in value, the month before. However, the figures are 12 per cent down on the year before, when the number of loans totalled 36,600.

The number of remortgage loans reached 24,300, worth £2.9bn, a 5 per cent increase in volume on the 23,300 loans advanced in January and 3 per cent up on the year before. There was no change in the value of remortgage loans between January and February.

The CML says first-time buyers made the largest contribution with 12,400 loans, worth £1.4bn, advanced in February.

For the second month running first-time buyers typically borrowed 80 per cent of their property’s value in February and they borrowed 3.11 times their income, the lowest income multiple since August 2009.

Home movers have seen little change in the percentage of their property they borrow with the average fluctuating just under 70 per cent since mid-2009. In February it was 69 per cent.

CML chief economist Bob Pannell says: “The February fall in lending compared to last year was despite the fact that lending in the early months of 2010 was itself depressed following the end of the earlier stamp duty concession. But research suggests cash purchases have remained steady since the credit crunch, indicating that the housing market may be holding up better than the low mortgage lending levels suggest.”

“We are likely to see a continuing increase in remortgage activity this year, especially if and when rate rises occur.”

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