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UK mortgages increased in November with loans to first time buyers stable

Loans for house purchase totalled 47,000, worth £6.9 billion, in November, a 4% rise from October and a 3% rise compared to November 2010. Remortgaging also increased. There were 31,200 loans worth £4 billion, up from 29,500 worth £3.7 billion in October and 30,700 worth £3.8 billion the previous November.
The figures also show that first time buyers took out 17,300 loans, worth £2.1 billion in November, up 4% by volume and 5% by value compared to both October 2011 and November 2010. Home mover loans increased by 5% in volume and 4% in value from October and by 2% in volume and value from a year ago.
While the number of first time buyers, and indeed all buyers, has declined markedly since the credit crunch, the proportion of loans advanced to first time buyers has remained remarkably steady, according tot he the CML. They have been fluctuating between 34 to 40% since 2005. In November, first time buyers took up 37% of the house purchase market, the same as in October.

First time buyers continued to see a decline in the proportion of their income accounted for by mortgage interest payments, some 12.2% in November compared to 12.3% in October and 13% the previous November.

Mortgage interest payments for home movers, however, stayed static at 9.2% for the second month, still the lowest proportion in nine years.

Fixed rate mortgages increased in popularity to their highest point in more than two years in November. Some 65% of all borrowers took out a fixed rate, up from 62% in October. This may be because a rise in interest rates seems more likely, although not imminent, and borrowers may want to lock in to current favourable rates, added the CML.

Repayment mortgages continue to be chosen by the vast majority of borrowers. Some 98% of first time buyers, up from 97%, 83% of movers, up from 82%, and 79% of remortgagers, up from 77%, took out a repayment mortgage in November.

‘A rise in mortgage lending towards the end of 2011 is a welcome indicator for the industry considering confidence has been weak due to fragile economies both at home and in the Eurozone. We should expect a further increase in first time buyer activity over the next few months as they push through their purchases to take advantage of the stamp duty concession before it ends in March,’ said CML director general Paul Smee.