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• Number of home loans for purchases rose by 4% in February
• Figure is down 47% compared to same month last year
The number of home loans taken out for house purchases crept up by 4% in February, according to figures out today.
Around 24,300 mortgages for homebuyers were taken out in February, down 47% compared with the same month last year. But while the number of loans increased, the value did not – in both January and February the total value of loans remained at £3.1bn.
The number of first-time buyers taking out mortgages rose by 7% to 9,400 – far lower than the 17,400 seen in February last year. First-time buyers continue to be squeezed by strict lending criteria and need a record high average deposit of 25% in February. The typical first-time buyer borrowed £95,000, down from £97,000 in January and £114,000 in February last year.
The number of remortgage loans taken out dropped sharply by 20% to 36,000, down from 44,000 in January, as lenders' standard variable rates remained attractive compared with new mortgage deals and falling house prices wipe out chunks of equity in property. With the more competitive remortgage deals demanding large deposits, many homeowners now have too little equity in their homes to qualify.
The number of people borrowing to move home edged up to 14,900, an increase of 3% compared with January, but a fall of 48% compared with February last year.
Last week, HSBC launched a range of loans requiring smaller deposits, and a number of larger banks are beginning to make more funds available for mortgage lending.
Michael Coogan, director general of the Council of Mortgage Lenders, said the slight improvements in lending conditions was "helpful", but added it would not "satisfy consumer borrowing demand on its own."
"We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year," he said.
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