The mortgage market is recovering, but the remortgage market is continuing to decline, according to the latest figures from the Council of Mortgage Lenders.
Figures released this week reveal that mortgage lending in March was up 45% on the year before marking the ninth consecutive annual growth, but that remortgaging was down 29% year or year, the 23rd consecutive year-on-year fall.
The CML says the figures "plainly show the continuing trend of recovering house purchase activity but a moribund remortgage market," although remortgaging is actually up 21% month on month.
In total, there were 45,000 mortgage approvals in March, worth £6.3billion, which is up 25% (24% in value) on February. Remortgages totalled 28,000 and £3.5billion, up from February's figure of 24,000 and £3billion.
The figures also revealed that first time buyer activity is also recovering, with 17,300 first time buyer mortgages approved in March, a 27% increase on the previous month and an annual increase of 42%.
The average mortgage for a first time buyer in February and March was 76% of the home value, and this, says the CML, is the first time average deposits for first-time buyers have been lower than 25% for more than one month since January 2009.
"For those with the deposits needed, low rates have made home loans initially very affordable," explains the CML.
"Home movers in March needed less than 10% of gross income to cover their mortgage interest payments. This is unchanged from February and is the lowest amount since the CML started recording this data in 1974."
The CML says that although first-time buyers have not seen quite as much benefit due to the fact that the best priced deals are available only to those with larger deposits, in the first three months of 2010, they only needed 13.3% of their income to cover their interest payments, the lowest since 2004.
Michael Coogan, director general of the CML says although the figures show some recovery, a lot more needs to be done.
"Today's figures indicate there is currently some momentum to house purchase lending, but for the sake of the future health of the housing and mortgage markets, the new government will need to focus on the critical issue of funding and how to address the issues arising from the repayment of the emergency support provided during the financial crisis," he warned.
"The UK is at risk of a chronic under-supply of credit – and the rationing of mortgages for customers – for years to come," he said.
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