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Affordable rates lift borrowing | Affordable rates lift borrowing |
(about 2 hours later) | |
The UK housing market has been relatively stagnant in 2010 | The UK housing market has been relatively stagnant in 2010 |
The number of loans made for house purchases rose slightly in the UK in May as low interest rates continued, lenders have said. | |
About 42,000 home loans were granted in May, up 2% on the previous month and 15% higher than May 2009, the Council of Mortgage Lenders (CML) said. | About 42,000 home loans were granted in May, up 2% on the previous month and 15% higher than May 2009, the Council of Mortgage Lenders (CML) said. |
Mortgage interest payments accounted for the lowest proportion of home movers' income for 35 years, it added. | Mortgage interest payments accounted for the lowest proportion of home movers' income for 35 years, it added. |
It predicted that mortgage borrowing would slow in the rest of 2010. | It predicted that mortgage borrowing would slow in the rest of 2010. |
A temporary increasing of the threshold at which purchasers must pay stamp duty had led to activity picking up in the second half of 2009, said CML director general Michael Coogan. | A temporary increasing of the threshold at which purchasers must pay stamp duty had led to activity picking up in the second half of 2009, said CML director general Michael Coogan. |
"With the government's austerity drive picking up momentum we are unlikely to see a repeat of those buoyant numbers this year," he added. | "With the government's austerity drive picking up momentum we are unlikely to see a repeat of those buoyant numbers this year," he added. |
Lending for house purchases has risen for 11 consecutive months. | Lending for house purchases has risen for 11 consecutive months. |
Affordability | Affordability |
With the Bank rate at record lows, the environment for low rates has meant that homeowners' mortgage payments have also proved to be low. | With the Bank rate at record lows, the environment for low rates has meant that homeowners' mortgage payments have also proved to be low. |
For those moving home, just 9.5% of average income was spent on mortgage interest payments in May - the lowest since comparative data began 35 years ago. | For those moving home, just 9.5% of average income was spent on mortgage interest payments in May - the lowest since comparative data began 35 years ago. |
There were 27,100 loans given to those moving home in May. This was up 2% on the previous month, and 19% higher than the same month a year ago. | There were 27,100 loans given to those moving home in May. This was up 2% on the previous month, and 19% higher than the same month a year ago. |
With many people staying on cheaper standard variable rates, the number of people remortgaging in May was still 14% lower than in May 2009. However, the 26,000 loans granted was 6% higher than in April. | With many people staying on cheaper standard variable rates, the number of people remortgaging in May was still 14% lower than in May 2009. However, the 26,000 loans granted was 6% higher than in April. |
Property ladder | Property ladder |
First-time buyers were also benefiting from relatively cheap rates, the CML said, if they could raise a significant deposit. | First-time buyers were also benefiting from relatively cheap rates, the CML said, if they could raise a significant deposit. |
Interest payments accounted for 13.2% of their income, the lowest since March 2004 but finding a large deposit is still a stumbling block for many, | Interest payments accounted for 13.2% of their income, the lowest since March 2004 but finding a large deposit is still a stumbling block for many, |
In May, first time buyers typically borrowed 75% of the value of the property, at an average of 3.14 times their income. | In May, first time buyers typically borrowed 75% of the value of the property, at an average of 3.14 times their income. |
Taking the average house price from the Land Registry in May, this would put the cost of a 25% deposit at £41,328. | Taking the average house price from the Land Registry in May, this would put the cost of a 25% deposit at £41,328. |
At the start of the year, the CML predicted there would be £150bn of mortgage lending in 2010. | At the start of the year, the CML predicted there would be £150bn of mortgage lending in 2010. |
It now describes that forecast as "a little optimistic". | It now describes that forecast as "a little optimistic". |