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Purchases up in February as remortgaging declines, says CML

The Council of Mortgage Lenders has revealed that the number of house purchase loans ticked up in February, but remortgage figures continued to fall.

The CML says there were 24,300 house purchase loans worth £3.1bn in February, compared with 23,400 loans also worth £3.1bn in January – a 4 per cent increase.

But it warns that, historically, activity remains very weak, running at around one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007.

Remortgaging declined steeply with 35,000 remortgage loans, down from 44,000 in January- a 20 per cent decline. The CML says it expects demand for remortgaging to remain muted as lenders’ standard variable rates are attractive compared to new mortgage pricing, and house price falls continue to erode equity levels which will exclude some borrowers from the best remortgaging deals available to those with large deposits.

The council also found that there were 9,400 loans to first-time buyers – a 7 per cent monthly increase – but significantly less than the 17,400 in February 2008.

CML director general Michael Coogan says: ” We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year.

“Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own. We need further market measures to be introduced by the government around the Budget to encourage a mortgage market where all types of lenders – banks, building societies and specialist lenders, and large and small businesses – are encouraged, and enabled, to commit more funds to the mortgage market if we are to enhance lending activity significantly.”

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