Lending rises in June
Some 52,000 loans were advanced worth £7.6 billion, up 19% in volume and 23% in value from May 2010. The annual increase in June was 14% in volume 27% in value. This is now the twelfth consecutive month in which lending has been higher than its year-earlier levels.
Lending for remortgage also increased, though only modestly, in June. There were 27,000 loans for remortgage, worth £3.4 billion, up from 26,000 worth £3.2 billion in May 2010 but down from 34,000 worth £4.2 billion in June 2009.
This is 20% higher by volume and value than the last quarter and up 17% by volume and 30% by value than quarter two 2009.
For remortgaging, the second quarter saw 77,000 loans worth £9.6 billion, up 2% by volume, with no change in value from the first quarter. In stark contrast to house purchase lending, the figure was down 20% by volume and 19% by value from the second quarter of 2009.
There were 52,200 loans worth £6.2 billion to first-time buyers from April to June, up from 43,400 worth £5 billion from January to March and 85,300 home mover loans worth £13.5 billion, up from 70,700 worth £11.2 billion.
The trade body also revealed that 48% of new borrowers took out a fixed rate mortgage in June, the highest proportion so far in 2010.
It said fixed rates had proved unpopular this year compared to the past several years due to an historically low bank rate and little prospect of the rate rising. But with fixed rate prices falling they are starting to find favour again.
CML economist Paul Samter said: “For the time being, the effects of government spending cuts have yet to make an impact on mortgage demand, and activity continues on its upward trajectory.
“But we still expect house purchase activity to be muted in the coming months. Both consumer demand and lending capacity remain distinctly difficult to call, especially in the light of the government’s austerity measures and their possible impact.”
The CML is publishing its revised lending predictions tomorrow which are widely expected to be lower than the current £150 billion gross lending it is estimating for 2010.