In April the Council of Mortgage Lenders which represents organisations responsible for 94% of all mortgage lending in the UK says that there were 40,000 home purchase loans advanced valued at £5.7 billion, volumes down by 9% on March.
Remortgage volumes declined by 16% in volume terms to 24,000 cases in April. This figure was 26% lower than the volumes advanced in April 09.
Whilst the trend for remortgage is definitely downwards, the CML commented that the seasonal dip in house purchase transactions was due to the Easter break and there was “an underlying trend of a gradual recovery in house purchase lending”.
First-time buyers made up the lowest proportion of house purchase loans since September 2007. They accounted for 35% of all house purchase mortgages, down from 39% in March and 38% in April 2009. The CML commented that the low share for first time buyers “shows that getting a mortgage remains problematic for first-time buyers who tend not to have a substantial deposit”.
Whilst the report suggested some improvement in affordability this was marginal.
The increase this year in the number of higher loan-to-value products available, has not yet translated into a sustained increase in loans to borrowers with lower deposits. The tentative signs of easing experienced in March returned to their previous levels in April, with the typical first-time buyer borrowing 75% and the typical home mover 67% of their property’s value.
Commenting on the data, Michael Coogan, director general of the CML, said:
"Easter traditionally causes a dampening of lending levels and this year was no exception. First-time buyers were particularly affected, perhaps because of the alteration to stamp duty, and in anticipation of the changes arising from the economic and political uncertainty of recent months.
"Lending for house purchase still looks modestly positive compared to 2009. But there remain a number of significant risks to this — in particular the potential for increased public sector unemployment arising from the government’s debt reduction programme, and higher taxation feeding into levels of disposable income."
Conveyancers that we have recently spoken to seem to be putting off recruitment or capital expenditure in anticipation of a hard budget this week.