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Mutuals lag behind as mortgages soar

Mortgage lending in April was at its highest level since records began in 1998, according to monthly figures from the Council of Mortgage Lenders.

Strong house-buying activity last month resulted in total gross lending rising to £12.6bn from £12.2bn in March and £9.2bn in April 2000.

But Building Societies Association figures show gross lending by mutuals fell to £1.9bn in April from £2.5bn in March although the figure was up by 8 per cent on last April&#39s £1.8bn.

According to the CML, lending for house purchases by both banks and building societies rose by 5.3 per cent to £8bn from £7.6bn in March – 27 per cent higher than at the same time last year when the figure was £6.3bn.

But recent high levels of remortgaging showed signs of lagging last month, dropping to £3.8bn from £3.9bn in March but still well above last year&#39s figure of £2.5bn.

Recent interest rate cuts helped average new mortgage rates fall further to 5.64 per cent from 5.89 per cent in March, with average new variable rates down to 5.52 per cent from 5.57 per cent. Average new fixed rates fell to 5.99 per cent from 6.19 per cent.

The BSA blames the ongoing pricing war between banks and building societies for the discrepancy in lending figures.

Director-general Adrian Coles says: “These are a particularly impressive set of figures given the current debate over building societies&#39 pricing strategies. Mutuals are clearly maintaining a strong presence in the market.”

CML head of research and analysis Bob Pannell says: “Reductions in interest rates have come at exactly the right time to stimulate the normal spring upturn in the market.”

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