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Remortgage activity up 30% year-on-year in August

Remortgage activity increased more than 30 per cent in volume and value year-on-year in August, according to the Council of Mortgage Lenders.

In August, there were 34,100 loans taken out, worth £4.2bn, compared to 25,700 loans, worth £3.2bn, the year before.

House purchase lending rose from 51,000 loans, worth £7.7bn, in August 2010 to 52,000, worth £7.9bn, in August 2011.

The number of loans to first-time buyers was 19,000, 5 per cent up on August last year, when there were 18,100 loans advanced. The value of lending to first time buyers increased from £2.2bn in August 2010 to £2.4bn in August 2011.

Home movers took out 33,000 loans in August, worth £5.5bn, a 1 per cent increase, and 2 per cent by value, from August 2010. Lending to both first-time buyers and home movers was at its highest for over a year.

First-time buyers continued to put down on average 20 per cent of their property’s value as a deposit and borrowed 3.2 times their income, slightly up from 3.17 times in July.

Typical deposits for home movers stayed at 31 per cent for a second month but in August home movers on average paid 9.4 per cent of their income on mortgage interest payments – the lowest since monthly records began in 2002.

CML director general Paul Smee says: “Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone, August lending showed welcome signs of life.

“With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy.”

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