Mortgage lending recovers to highest in over a year

The number of mortgages lent for house purchase rose 7% in August from the month before, to reach 52,000.

The figure was up 2% on August the year before, the Council of Mortgage Lenders said.

The number of loans to first-time buyers rose 5% both from July and August last year, with 19,000 loans taken out by first-time buyers. Home movers took out 33,000 loans in August. Lending to both first-time buyers and home movers was at its highest for over a year.

Meanwhile, remortgaging activity rose sharply by 9%, with 34,100 remortgage loans advanced.

Lending criteria for both groups in August showed little change from the previous months. First-time buyers continued to put down on average 20% of their property’s value as a deposit and borrowed 3.20 times their income, slightly up from 3.17 times in July.

Typical deposits for home movers stayed at 31% for a second month but in August home movers on average paid 9.4% of their income on mortgage interest payments – the lowest since monthly records began in 2002.

Paul Smee, director general of the CML, said: “Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone, August lending showed welcome signs of life.

“With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low-rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy.”