The Council of Mortgage Lenders which represents organisations responsible for 94% of all residential mortgage lending in the UK has issued its report on the mortgage market for May 2010.
Remortgage activity is reported as having recovered by 6% with 26,000 remortgage loans being made in May.
Mortgages for house purchases increased 2% to 42,000.
There remains significant speculation in the market that as lenders start to repay some of the emergency funding provided by the Government later this year mortgages will be increasingly hard to get as lenders expect a period of less liquidity therefore the increases in mortgage activity may be short lived.
First-time buyer activity also continued to rise to by 2% with 14,800 loans being made at an average loan to value of 75%
Michael Coogan CML director general said “House purchase lending continues its recovery but positive comparisons with equivilant months a year ago look unlikely to continue. Activity picked up in the second half of 2009 due to the stamp duty holiday but with the governments austerity drive picking up momentum we are unlikely to see a repeat of those buoyant numbers this year. Our forecast for gross lending in 2010 may now be looking a little optimistic.”
Jonathan Moore, director of Easy Room mate comments:
“Mortgage lending may have snicked up in May, but let’s not get carried away. Lending is still constricted, and this is not likely to rocket up anytime soon. Spending cuts and tax increases will not only provide a difficult economic climate for lenders, they will impact on would-be buyers’ household finances — and ability to afford to buy their own homes. While mortgage repayments have fallen slightly for first-timers, this is no consolation to the thousands who still cannot afford the huge deposits lenders require. This is the main hurdle for would-be buyers to clear before they can take advantage of attractive, low rates. So we are campaigning for state-backed banks and building societies to consider potential room rental income when deciding how much to lend. This would allow first-timers to access an extra £11,000, helping many get a leg up onto the property ladder.”
