The number of mortgages taken out for house purchase in August represented a 29 per cent increase on the same time last year, new data from the Council of Mortgage Lenders has found.
August's mortgage lending for house purchase was five per cent lower than July's figures, and remains significantly lower than the 100,000 average of the seven years previous to the credit crisis, but the 53,000 mortgages for house purchase marks a significant increase on last August, suggesting that house purchase loans are continuing to recover.
While remortgageing remains 57 per cent lower than last year, house purchase activity in August, worth £7.2billion, accounted for its largest share of total mortgage activity since 2002; gross mortgage lending of £12.3billion was recorded for August, a 36 per cent decline compared to August 2008.
Of the 53,000 mortgages for house purchase taken out in August, 19,200 were first time buyer mortgages, and mortgages for home movers accounted for 33,400 loans.
Reflecting uncertainty about interest rates and a desire for financial stability, fixed rate mortgages represented the vast majority of home loans taken out in August, accounting for more than three quarters of lending.
Despite falling interest rates, mortgage lenders continue to offer the best deals to those with the largest deposits, and first time buyers accordingly had an average deposit of 25 per cent in August, even bigger than last year when the average mortgage had an 85 per cent loan to value.
Paul Samter, economist at the CML is positive about what the results say about the mortgage market: "House purchase activity has revived from its moribund state at the beginning of the year. It will be a drawn out recovery process with seasonal ups and downs, but house purchase activity is now on a firmer footing," he said.
"But remortgaging demand has fallen away in the low interest rate environment and this is dragging down gross lending levels overall."
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