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Gross mortgage lending increased by 5% in April in the UK, latest CML data shows

Remortgage activity gained some ground in April while house purchase lending edged down in April compared to March.

A total of £3.4 billion was advanced to borrowers remortgaging in April, up by 10% compared to March. There was still a 3% fall compared to April last year but the rate of fall has decreased over the past two months.

First time buyers took out 19,400 loans worth £2.5 billion in April, down by 1% compared to March. The CML said that although year on year comparisons are distorted by the impact of the end of the stamp duty concession on lending in March and April last year, activity in the first four months of the year was 11% stronger than the same period last year.

First time buyers continued to account for an increased proportion of all house purchase loans. Some 46% of all house purchase loans in April were advanced to first time buyers but this was unchanged from March, but considerably higher than the 38% average seen since 2007.

First time buyers typically borrowed a slightly larger amount in April than in March, borrowing 3.25 times their income, up marginally from 3.24 times in March. Despite the modest increase in loan size relative to income, first time buyer mortgage payments took a slightly lower proportion of their income at 19.1% in April compared to 19.3% in March.

A total of 23,500 loans worth £3.8 billion were advanced to home movers in April, down by 1% compared to March but an increase of 4% compared to April last year. House purchase activity was little changed in April the number of loans advanced edged down slightly.

While there was no change in the value of house purchase lending, the number of loans advanced dipped compared to March. A total of 42,600 house purchase loans worth £6.3 billion were advanced in April, compared to 43,000 loans in March. As with first-time buyers, comparisons with a year earlier are distorted by the end of the stamp duty concession, but if we compare the first four months of this year with the same period last year there was a 1% increase in house purchase activity.

‘Lending to first time buyers remains above the levels seen at the same time last year, despite the boost caused by the end of the stamp duty holiday in March last year. The Help to Buy scheme announced in this year's Budget should provide a further boost to the first time buyer and home mover markets, but we still await further details on how the initiatives will work,’ said CML director general Paul Smee.

Reaction to the figures was positive. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), said that although there has been little change in relation to house purchase lending and home movers, first time buyers are accounting for a growing proportion of the mortgage lending total.

‘Despite witnessing a 1% fall in the number of loans taken out by first time buyers the typical amount borrowed has increased, meaning that the overall value of loans has remained at the same level as this time last year,’ he pointed out.

‘Despite the fact that the Help to Buy mortgage guarantee scheme has not yet been introduced these figures show that lenders are already offering a helping hand to first time buyers with small deposits. In fact, activity in the first four months of this year has been 11% stronger than in the same period of last year which itself was boosted by the ending of the stamp duty holiday. The rise in remortgaging is beneficial to lenders and borrowers and adds to the momentum building in the market,’ he added.

Brian Murphy, head of lending at Mortgage Advice Bureau, said that a range of new mortgage products and increasingly attractive mortgage rates have helped. ‘New buyers and homeowners alike have been keen to make the most of the great deals of offer, with a flurry of activity in the both remortgaging and first-time buyer arenas,’ he explained.

‘Strong first time buyer activity is particularly heartening. Average loan to value (LTV) is starting to show signs of improvement as government funding filters through to up the LTV curve. Low deposit deals are essential for the first time buyer’s access to the market, and are something we hope to see lenders focus on as the government’s Help to Buy scheme matures,’ he added.

According to Simon Crone, vice president commercial for Mortgage Insurance Europe at Genworth, it is encouraging to see first time buyer activity up year on year. ‘But the fact that average loan to values remain around 80% mean that many potential home owners are still unable to amass the sort of deposit required to get on to the property ladder,’ he said.

‘Factor in recent CML research that highlighted the high proportion of first time buyers still heavily reliant on the Bank of Mum and Dad for financial assistance in realising their property ownership aspirations and it proves we haven’t fully unblocked the first time buyer logjam just yet,’ he added.

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