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Mortgage News Mortgage Approvals Up 29 Per Cent In March 3324

Written by Editorial Team

Mortgage approvals up 29% in March

15 May 2009 / by Rachael Stiles
Mortgage approvals for house purchase rose 29 per cent in March compared to the previous month, according to the latest figures from the Council of Mortgage Lenders.

While March’s mortgage lending figures were still 33 per cent down on the same time last year, the 29 per cent rise since February suggests conditions are easing slightly for home buyers.

House purchase in March took the largest percentage of mortgage lending since 2007, the CML’s figures show, up to 35 per cent from 31 per cent in February, but remortgage loans still accounted for a larger proportion of loans, rising to eight per cent, but was still down 45 per cent on March 2008.

The CML said that is does not expect remortgage figures to recover in the near future as homeowners benefit from reversionary rates as they emerge from fixed rate deals into a very different market to that in which they entered into the loan.

Existing homeowners are also being restricted by falling house prices, which are reducing the equity in their homes and making it more difficult to refinance.

First time buyer mortgages took a larger share of the market in March, accounting for 40 per cent of home loans, up from 38 per cent in February, and the highest proportion since 2005.

For first time buyers with a significant deposit, interest payments are at the lowest since 2004, as a result of lower interest rates and falling house prices, accounting for 15.1 per cent of their income.

“Because the flow of lending is still constrained, there is a sharp dividing line in the housing and mortgage markets between those who can raise a substantial deposit and those who can’t,” said the CML’s head of research, Bob Pannell, commenting on the latest data.

“For those who can, the burden of debt payments is low and mortgage interest is consuming proportionately less income than for a number of years. This is good news for now. Even so, a mortgage is a long term commitment. People borrowing now should be mindful of the years ahead when interest rates eventually rise, as they will.”

But, he added, for those without substantial deposits the outlook remains “difficult and uncertain.”

Peter Bolton King, chief executive of the National Association of Estate Agents, said of the latest CML figures: “First time buyers believe that there are bargains to be had in property at the moment, and the upshot of this is that confidence is returning to the market.”

Ben Thompson, director of Legal & General mortgages, believes that for each buyer, access to the property market is dependent on the size of their deposit. “It’s no wonder that most potential first-time buyers are waiting for house prices to fall further and for mortgage rates to even out a bit,” he said.

We’ve seen some tentative moves by lenders to offer higher LTV mortgages at reasonable rates through our Mortgage Club, but it’s only going to help a lucky few. Most of these first-time buyers are going to have to double their efforts to put money aside to improve their position,” he added.

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