Mortgage lending for purchase rises

18 September 2003
August saw a swing back to lending for house purchase from remortgaging, according to figures from the Council of Mortgage Lenders.

The latest Survey of Mortgage Lenders shows that lending for house purchase totalled £11.5 billion in August (the highest figure since CML monthly records began), accounting for 48 per cent of total lending.
This compares with £11.0 billion (45 per cent) in July, and £10.8 billion (52 per cent) in August last year. The proportion of lending for house purchase was just 35 per cent in April and May this year.

Remortgaging remained strong, however, at £9.4 billion (40 per cent of the total), but was lower than July's £10.5 billion (43 per cent).

In August, the average rate charged on a new variable rate mortgage was 3.94 per cent. The rates on fixed rate mortgages for 1-2 years and 2-5 year products were similar, while the average rate on longer term 5 year fixed mortgages was higher.

The CML's response to the Miles review on fixed-rate mortgages this week saw little evidence to suggest a mass migration to long-term fixed-rates in the absence of a specific Government incentive or subsidy.

Commenting on the figures, CML Director General Michael Coogan said, "The latest figures continue to tell a story of a housing and mortgage market that is buoyant, but difficult for first-time buyers to enter."

"The housing and mortgage markets have remained stronger for longer than we expected earlier this year," he added.

"But we continue to expect a slowdown in house price growth - early evidence of this is already emerging. And people borrowing now should factor in an expectation of higher interest rates next year."