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Purchases down to 45% of loans

Less than half of mortgage lending last year was for house purchase, according to new figures from the Council of Mortgage Lenders.

Gross mortgage lending in December 2004 fell by around 14 per cent to 21.3bn from 24.6bn in December 2003.

Lending for house purchases accounted for only 45 per cent of the 292bn total lending figure for 2004, the same as in 2003 and the lowest annual figure since records began.

Lending for purchases accounted for 9.8bn in December, up from 9.1bn in November but 22 per cent down on December 2003’s 12.6bn.

There were a total of 1.2 million loans for house purchase last year, with 31 per cent were to first-time buyers, up from 29 per cent in 2003. There were 369,000 loans to FTBs, up slightly from 367,000 in 2003.

The average first-time buyer borrowed 86 per cent of property value, down from 89 per cent in 2003. Home mov-ers took out loans at an average of 64 per cent LTV, down from 71 per cent in 2003.

Remortgage lending in December totalled 9.4bn, down from 10.4bn in November. Remortgaging accounted for 44 per cent of total lending in December and 43 per cent in 2004 as a whole. Remortgaging in 2004 totalled 124.5bn, a slight rise from 123.6bn in 2003.

CML director general Michael Coogan says: “Over the year as a whole. we anticipate a stable market with a healthy level of activity but without the dramatic increases in house prices and lending volumes experienced in 2004. Against this backdrop, homeowners are likely to lose some of their appetite for borrowing against their housing equity and first-time buyers may well see affordability constraints ease a little.”Halifax first-time buyer survey, p18

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