Despite a decline in remortgaging levels mortgage lending remained strong in February, according to figures from the monthly survey of mortgage lenders.
Loans for house purchase, which totalled 90,000, rose to £6.8bn, from £6.7bn in January, according to a Council of Mortgage Lenders (CML)/Department of Transport, local Government and the Regions survey, based on completions from banks and building societies.
According to the Building Societies Association (BSA), gross advances accounted for £2.15m of this total in February, up from £2.11m in the previous month. Remortgaging declined to £5bn in February compared to January’s record-breaking £5.6bn.
Michael Coogan, director general of the CML, said: ‘Lending remained buoyant in February, even though remortgaging fell from January’s record figure. Remortgaging accounted for 38% of gross lending, above its historic level of 30%. It is likely to remain popular. The available discounts continue to bolster the popularity of variable rate loans, despite the attractions of locking into fixed-rate mortgages. This may also reflect the increased cost of fixed rates, due to market expectations that the next interest rate move will be upwards.’
The average rate of interest in February was 4.7% (4.68% in January). The average new variable rate was 4.41% (compared to 4.39%) and the average new fixed rate was 5.19% (compared to 5.14%). On average, first-time buyers borrowed 79% of the value of their properties and 2.53 times their income, while former owner-occupiers borrowed an average of 68% of the value of a property, or 2.31 times their income.
Commenting on the BSA results, Adrian Coles, its director general, said: ‘The most encouraging aspect of the data is the sharp increase in building society approvals in February ‘ up 20% on the previous year. This suggests building society lending will rise sharply in the spring, reflecting both the strength of the housing market as a whole and the attractiveness of the mortgage products on offer.’