This marked the ninth consecutive month of year-on-year growth for house purchase lending and the 23rd consecutive monthly fall for remortgaging.
In March, 45,000 loans for house purchase were advanced worth £6.3bn, up 25% in volume on February, while 28,000 remortgage loans worth £3.5bn were made, up 23% in volume. However, remortgage numbers remain weak and are expected to continue as such for some time.
For Q1, the number of house purchase loans fell from 171,000 worth £23.3bn in Q4 2009 to 112,000 worth £16.1bn. Remortgage loans in Q1 also dropped from 89,000 in the last quarter of 2009 to 74,000. The CML said no trend can be discerned from this drop due to the distortion caused by the end of the Stamp Duty holiday in December.
First-time buyer activity is rebounding faster this year than homemover activity, with numbers up 27% on February to 17,300 and 42% on March 2009. Loans to homemovers rose 24% on February to 27,500 and 49% on the same period last year.
First-time buyers borrowed an average of 76% of the property price for the second month running. This is the first time average deposits for first-time buyers have been lower than 25% for more than one month since January 2009. Nevertheless, the CML said that only time will show whether this is truly reflects a tentative sign of easing, while deposit constraints continue to remain tight across all areas of lending.
The CML’s figures also revealed that homemovers in March needed less than 10% of gross income to cover their mortgage interest payments. This is unchanged from February and is the lowest amount since the CML started recording this data in 1974.
By comparison, first-time buyers have not seen the same benefit, with the best priced deals still available only to those with larger deposits. However, in the first three months of 2010, they needed just 13.3% of their income to cover their interest payments, the lowest since 2004.
Only 46% of new loans were fixed-rate deals in March, which is largely unchanged for the first three months of 2010, but down from 60% in the last quarter of 2009 and a peak of 80% last July. Tracker rates accounted for 37% of new mortgage lending, again broadly unchanged, but up from the low of 12% in July 2009.
Michael Coogan, director-general of the CML, said: “Today’s figures indicate there is currently some momentum to house purchase lending, but for the sake of the future health of the housing and mortgage markets, the new Government will need to focus on the critical issue of funding and how to address the issues arising from the repayment of the emergency support provided during the financial crisis. The UK is at risk of a chronic under-supply of credit – and the rationing of mortgages for customers – for years to come.”
