Loans for house purchase increased by 4% in volume to 52,700, and by 2% in value to £7.9 billion; although both were 44% lower than May last year.
However, there was a steep decline in remortgaging from April to May. There were 71,000 loans for remortgage, down 14% from April and 23% from May 2007. The value of remortgage lending declined by 13% in May to £9.6 billion, which represented 39% of all lending compared to 42% in April.
The number of loans to first-time buyers rose by 4% from April to 19,200, but was 41% lower than May last year. Home movers took out 33,500 loans, up 4% from April, and down 46% from May last year.
-- Advertisement --
Affordability measures remained stable in May, but are still well below the peaks of last summer as those able to obtain mortgages are less stretched financially. First-time buyers typically borrowed 3.3 times their income, compared with 3.39 in July last year.
Despite fixed rates becoming relatively more expensive, take up has revived. This suggests borrowers are looking for peace of mind over future payments in these uncertain times. Fixed-rate mortgages increased in popularity in May, accounting for 66% of all new loans, up from 59% in April.
CML Director General Michael Coogan commented: "The growing popularity of fixed-rate mortgages, despite the relatively high rates, suggests that many borrowers are prioritising certainty in their monthly payments.
"Lending levels continue to be lower than last year and any recovery is still some way away, with little sign of the special liquidity scheme increasing the flow of funds to the industry or lowering the cost of funds as hoped. We look forward to an early, positive report from the Crosby review on how the market should address these issues with the support of the tripartite authorities."
(CD/JM)
