Lending shows rapid rise despite remortgage drop
First-time buyers propped up the mortgage market in June with the highest levels of borrowing in years, figures from the Council of Mortgage Lenders have shown.
With the exception of March this year, when lending to first-time buyers was boosted by the end of the stamp duty concession, June saw more lending to people getting on to the property ladder since July 2010. There were 19,200 loans worth £2.4bn, an increase of 9.1 per cent on May and up 3.8 per cent on June 2011.
Brian Murphy, head of lending for the Mortgage Advice Bureau, said: “Average rates are coming down in the 90 per cent loan-to-value sector too which will help boost first-time buyer numbers in the coming months.”
In contrast, lending in the overall mortgage market in June was weak with gross lending down 6 per cent on May’s figures and 7 per cent year-on-year.
While lending for house purchase was flat year-on-year, the biggest shock coming out of June’s figures was remortgage data.
Lending for remortgages fell by 21 per cent from May to June, down 25 per cent year-on-year, the figures showed.
Paul Smee, director-general of the CML, suggested the decline was driven by expectations that borrowing rates could fall later in the summer. He said: “We may see more fluctuations in the coming months.”
Paul Campion, mortgage adviser for Buckinghamshire-based The Financial Management Group, said the decline was a result of borrowers not being able to remortgage their properties.
He said: “People are stuck because of negative or limited equity. Lending criteria has tightened up so they are also finding new lenders won’t take them on.
“In addition you’ve got people on low standard variable rates who don’t want to move because they are on such a good deal.”
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