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Recovery hopes rise as house loans increase 23% in June

The CML said its data showed further signs of stabilisation in the mortgage market, but transactions were still weak on a historic basis and lending had increased from very low levels.

The number of loans for June was less than half the average number of loans for the same month over the last seven years.

A total of 116,700 house purchase loans were advanced in the second quarter, a 50% increase from the preceding three months but down 22% from the second quarter of 2008. 

Fixed-rate deals have increased in take-up throughout the second quarter and by June made up 78% of new lending, the largest share since June 2007.

This appears to be supply-driven, reflecting the more widespread availability of fixed-rate products in the marketplace.

The typical first-time buyer had a 25% deposit, unchanged since February. Home movers typically borrowed 69% of the property’s value, unchanged from April.

Income multiples have also started to increase modestly, with the typical first-time buyer borrowing 3.08 times their income, compared to 3.04 in May, and home movers typically borrowing 2.76, compared with 2.74 in May.
CML economist Paul Samter said: "Low interest rates and realistic selling prices have helped generate a welcome increase in transactions. But there is some way to go before we reach normal levels of activity.

"There are tentative signs that lending criteria are easing, but remortgaging demand is likely to remain subdued whilst interest rates stay at current levels."

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