Remortgages keep the market buoyant

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.”