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Mortgage borrower numbers on the rise – CML

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12/09/2012
Mortgage lending rose in July thanks to an increase in the number of home movers and first-time buyers, according to figures from the Council of Mortgage Lenders (CML).
Mortgage borrower numbers on the rise – CML

The industry body found that the number of loans taken out by people moving home jumped 3.7% in July to 30,500, compared to the same month in 2011. Loans had also risen when compared to the previous month, rising 8.2% from June to July.

After rising to 70% in June, the average loan-to-value ratio for house movers fell back to 69% the following month, the same level it was a year ago.

The number of first-time buyers taking out mortgages was also on the up, rising 8% year-on-year to 19,000, although July’s figures were marginally down on the previous month.

The total value of loans to new borrowers was £2.5bn in July, the largest monthly figure since the end of the Stamp Duty holiday in March. During the month the average LTV was 81%, a rise on the figure of 80% posted in July 2011.

Paul Smee, CML director-general, said: “July’s figures show a gradual improvement in the market with lending approaching the sort of levels we saw at the end of the Stamp Duty concession.

“While overall market conditions remain tight, new initiatives such as Funding for Lending and NewBuy have the potential to help lending to continue to ease gradually.”

While remortgage lending rose slightly month-on-month, the number of remortgages in July was down 20% on the same point last year. The amount of lending in the market has fallen considerably, from £4bn to £3.2bn in that time.

Ashley Brown, director of mortgage brokerage Moneysprite, added: “These latest figures are in stark contrast to what we’re seeing on the ground.

“House move-based transactions are few and far between while lenders come out in a rash even at the sight of a first-time buyer. I’m quite frankly baffled.

“From where I’m standing, there’s been less a gradual improvement in the market rather than a gradual decline.

“The high loan-to-value sector has been stifled by a lack of competition. Even new entrants into the market, such as Metro Bank and Tesco Bank, are apparently allergic to anything above 80%.

“Waiting for the mortgage market to gain momentum is like waiting for Godot.”

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