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Remortgaging boosts March lending figures

Total gross mortgage lending remained strong in March despite a fall in the amount lent for house purchases, according to the Council of Mortgage Lenders.

The CML&#39s monthly figures reveal that gross mortgage lending hit £19.3bn in March up from £17.6bn in February and £16.1bn at the same point last year.

The boost was due mainly to remortgaging, which accounted for 50 per cent of all lending, totalling £9.6bn from £8.7bn in February.

However, loans for house purchase – at £7.8bn – accounted for just 40 per cent of all lending, up on £7.3bn in February but 13 per cent down on last March, when it stood at £9bn. This is the first time lending for house purchase has shown a fall year-on-year since June 2002.

Fixed-rate borrowing increased in popularity in March, accounting for 47 per cent of new lending compared with 39 per cent in February and 30 per cent last March.

The CML attributes this rise to the narrowing of the gap between fixed and variable rates – the average new fixed rate in March was 4.5 per cent while the average variable rate was 4.2 per cent. In February, the gap was 0.52 per cent while last March it was 0.84 per cent.

Building society gross advances also rose last month. According to Building Societies Association figures, gross advances reached £3.37bn up from £2.97bn in February and £2.67bn last March.

Loans agreed but not yet made were £3.84bn down from £3.94bn in February but up from £2.42bn last March.

CML director-general Michael Coogan says: “The lower year-on-year level of lending for house purchase suggests the market may be returning to more normal levels although it is important not to read too much into a single month&#39s figures.”

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