The Council of Mortgage Lenders (CML) has warned that there could be a lull in house purchase completions in the next few months.
This is despite the lender body rewriting that loans for house purchase increased in April.
There were 40,900 loans, worth £5.9 billion, advanced for house purchase in April, up from 37,900, worth £5.5 billion, in March and down from 41,900, worth £6 billion, a year earlier.
Remortgage lending fell in April. 24,700 remortgage loans were advanced, worth £3 billion, compared to 34,100, worth £4.1 billion, in March.
The CML said that, with remortgage activity currently linked to expectations of interest rate movements, future activity will be subdued as an imminent increase in the bank rate is now looking less likely. There was also a fall in remortgage approvals in April so remortgage completions are likely to remain modest in the coming months.
The number of loans to first-time buyers increased by 8% in April, from 14,700 (worth £1.7 billion) in March to 15,800 (worth £1.9 billion). Loans were also up slightly from 15,700 (also worth £1.9 billion) in April 2010.
First-time buyers borrowed on average 80% of their property’s purchase price in April, more than for most of the last two and a half years, but still well below the 90% that first-time buyers typically borrowed before 2008.
Mortgages to home movers also increased in April, with 25,100 advances, worth £4 billion. This is an increase of 8% (5% by value) compared to March, but, unlike lending to first-time buyers, a fall of 4% (2% by value) compared to a year ago.
Home movers have typically borrowed just below 70% of their home’s purchase price since the middle of 2009 – in April it was 69%.
For the second month running, in April 2011, only 4% of first-time buyers took out an interest-only mortgage. Before 2008, it was typical for around 30% of loans to first-time buyers to be on an interest-only basis.
Michael Coogan, CML director general, said: “The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011. However
