Britain’s mortgage lenders are continuing to make it more difficult for first-time buyers to get on the housing ladder as the average deposit rose to a three-year high of 13 per cent and the number of new loans granted in April dropped by 36 per cent.
New figures released by The Council of Mortgage Lenders (CML), revealed overall gross mortgage lending in April rose by 8 per cent to £26.1 billion following two consecutive months of decline, down five per cent from April 2007.
Although the annual decline in April was lower than in recent months, gross lending in March 2008 was down 24 per cent compared with March 2007 - suggesting a slight return in confidence to the market .
"Monthly house purchase lending volumes continue to be lower than last year’s levels and there will be a further weakening in coming months as recent approvals data has shown," said CML general director, Michael Coogan.
According to the CML, the average deposit paid by first-time buyers increased to 13 per cent in April - the highest level in over three years.
The tightening in lending criteria by a number of UK banks follows the US sub-prime mortgage crisis, which continues to put a squeeze on mortgage funding, and the near collapse of Northern Rock .
The figures revealed that 18,500 loans were granted to first-time buyers in April, up four per cent from March but down 36 per cent on the same month last year.
Loans taken out by existing home owners rose 13 per cent from March to 32,000, although 38 per cent lower than April last year.
The ratio that buyers can borrow against their salary has also tightened, from 3.35 times salary to 3.3 times.
The proportion of borrowers opting for more secure mortgages by taking out fixed-rate products increased to 59 per cent in April, from 54 per cent in March - the largest proportion since December last year, but still falling well short of the 77 per cent recorded last summer.
The CML figures also found that there were 50,700 loans for house purchase, worth £7.7 billion in April, while 83,000 loans for remortgage worth £11 billion were taken out during April – accounting for 42 per cent of gross mortgage lending in April.
Slump In First-time Buyer Loans As Mortgage Market Continues To Weaken
Slump In First-time Buyer Loans As Mortgage Market Continues To Weaken
Fri, 13 Jun 2008
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