The number of mortgages for house purchase increased by 12 per cent in February, according to the latest figures from the Council of Mortgage Lenders, after a rocky start to the year.
Following an "extremely weak" January, when mortgage lending was affected by various isolated factors, such as the end of the stamp duty holiday and severe weather conditions, February's lending figures signifies a "modest recovery", the CML said.
But while the 35,000 advanced loans made, worth £5billion, marked a 'modest' increase, lending was up by 49 per cent in volume and by 67 per cent in value compared to February 2009.
First time buyers were deterred from buying in January after the temporary suspension of stamp duty came to an end at the start of the year, so first time buyer mortgage numbers rose slightly faster than the rest of the market in February as first timers returned to the market, up 13 per cent in volume and 15 per cent in value compared to the previous month.
Home mover activity was less affected by the stamp duty holiday, but the cold weather or post-Christmas fallout still kept buyers at home in January, as February saw an 11 per cent rise in the number of mortgages taken out and a six per cent rise in value on the month before.
Remortgage activity has continued to remain week, but February's two per cent rise was the first increase in five months. The CML does not expect the remortgage market to improve significantly for some time to come.
While interest rates remain at an historic low, tracker mortgages remain popular, with fixed rate mortgages falling out of favour, representing their lowest market share for around five years in February, at 47 per cent.
Commenting on the figures, Bob Pannell, head of research at CML said he does not expect to see a drastic change in lending patterns in the near future, "With the supply of credit still tight and the upcoming election causing political uncertainty".
He did say, however, that the new stamp duty exemption for first time buyers on properties worth up to £250,000 might boost the market, and, he added, "we hope to see the traditional seasonal pick-up as the weather gets warmer and the days get longer."
Mr Pannell explained that "The start of the year is traditionally a quiet period for mortgage lending," but that these conditions have made it difficult "to identify clear trends in recent months."
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