Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders. There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.
Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months. First time buyers found it marginally easier to access finance in September, with an increase in loans of 4%. However the number of loans is still down on this time last year and is 4% lower than September 2009 by value.
Credit remains tight, and first time buyers borrowed on average 73% of the value of their property, down from 77% the previous month. The number of first time buyers in the market is also down 5% on the same period in 2009.
Michael Coogan, director general of the CML, commented: "With lending volumes at historic lows, stability in the mortgage market is the name of the game at the moment. With both consumer demand falling and funding capacity limited, neither supply nor demand look likely to feed through to any significant improvement in lending volumes as we head into winter."