The housing market stayed buoyant in November last year, with gross lending
leaping to £20.5bn from £15.3bn at the same time in 2001,
according to latest figures from the Council of Mortgage Lenders.
But the figures show a fall from £21bn in October and the CML says the
strong market was maintained by high levels of remortgaging.
Remortgaging in November reached £8.5bn, accounting for more than
two-fifths of all lending, almost double the £4.8bn in November 2001
although down from £8.8bn in October.
The CML says lending criteria remained within sensible parameters, with
first-time buyers borrowing an average 76 per cent of the value of their
property and movers borrowing an average 62 per cent.
First-time buyers borrowed an average 2.55 times their income while
existing owner-occupiers borrowed an average 2.35 times their income.
The CML says interest rates on new loans continued to be very competitive,
with an average new variable rate of 4.29 per cent and average new fixed
rate of 4.78 per cent.
But it says although there is little sign of any let-up in mortgage
lending, borrowers should beaware that the housing market is expected to be
less frenetic this year. It predicts that house price inflation will return
to more sustainable levels.
Deputy director general Peter Williams says: “We continue to urge borrowers
to exercise sensible judgement about both mortgage and consumer borrowing
and not to expect the kind of growth in house prices that we have seen this
year.
“With unemployment and interest rates expected to rise to some degree in
2003, people need to factor in a less benign economic environment to their
future borrowing decisions.”