Loans For House Purchase Showing Positive Growth
After a dismal couple of years for the housing and homeowner loan markets, we appear to be starting to see some signs of recovery in this area, as new homeowner loans to people looking to move house, or buy for the first time actually started to show positive growth during the month of July this year, which is the first time that new purchase loans have been in positive territory since the beginning of 2007, according to the latest figures from the Council of Mortgage Lenders (CML).
According to the statistics from the CML, gross lending on new homeowner loans has increased for the past two months, to reach a total of £14.5 billion in July. The total number of new loans in connection with a new house purchase was 56,000, for a value of £7.5 billion.
These new homeowner loans were largely made up of people looking to move house, with 35,700 loans to home movers and 20,400 new loans to first time buyers, these figures show an increase of 18 per cent and 28 per cent respectively above those for the previous month. More than 75 per cent of these loans were taken out on a fixed rate basis, as borrowers try to avoid the effects of potential interest rate rises in the near future.
The number of loans for remortgage remained particularly low however, as many existing borrowers continue to choose to keep their existing loan with their current lender on their standard variable rate, as this is usually still a cheaper loan than any new deals which may be on offer.
Paul Samter of the CML commented that although new loans were on the increase there were still constraints on the industry. He said “These constraints are affecting the lending industry’s capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being. The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”
