But, with Bank of England data showing a fall in house purchase approvals in April, there could be a lull in house purchase completions in the next few months.
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.
While this is a further increase compared to earlier in the year, house purchase activity is still below the level seen in April last year.
Remortgage lending fell in April. 24,700 remortgage loans were advanced, worth £3 billion, compared to 34,100, worth £4.1 billion, in March. This is fractionally higher than April last year.
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.
Loans for house purchase and remortgage
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.
First-time buyers, lending and affordability
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%.
Home movers, lending and affordability
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.
This shows here has been a clear shift away from interest-only mortgages, in particular for first-time buyers, since the financial crisis.
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, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions so we do not expect further increases in lending over the coming months."
Brian Murphy of independent mortgage broker, Mortgage Advice Bureau, said:
"The rise in house purchases in April reflects approvals from the first quarter of the year. The CML are right that activity during April was muted because of the seemingly endless Bank Holidays and Royal Wedding and this could impact completions in the next quarter.
"However, while activity is still at historically low levels given ongoing caution among both lenders and consumers, during May and the first half of June it switched back to pre-April levels.
"Remortgage activity, although higher than a year ago, has certainly plateaued, as the likelihood of a rate rise this year decreases.
"The fact that the May inflation data came in at the same level as April, rather than having risen further, has meant the Bank is under no extra pressure to raise interest rates."
Richard Sexton, business development director of e.surv chartered surveyors, said:
“The subdued lending this April compared to last year shows banks and building societies are still at the mercy of regulatory double-thinking as the government insists they lend more while simultaneously tightening capital adequacy limits.
"First time buyers will be as despondent as ever. Even though house prices have remained broadly flat since late 2006, purchase approvals on properties under £125,000 – typical first time buyer territory – have fallen from accounting for 31% of all approvals back in October 2006 to just 23% of approvals in May 2011.
"The lack of mortgage finance is the constraint. Lenders are the only ones who can get the ball rolling again with any real momentum but they’re stuck between a rock and a hard place at the moment. Any revision to regulation needs to lead the way to new lending.”
David Whittaker, managing director of Mortgages For Business, said:
“A month of growth in mortgage market activity may be enough for some to herald recovery but one swallow does not make a summer.
"Activity will remain subdued this year with month-on-month rises and falls being the norm and until there is a significant sea-change in the amount lenders are prepared to issue to borrowers we’re unlikely to see a dramatic recovery in the mortgage market.
"Lenders and government must come up with a sensible balance of capital requirements and lending targets, if they don’t the market will be stuck in the doldrums for a long time to come.”
David Brown, commercial director of LSL Property Services said:
“Any growth in monthly mortgage lending is welcome news for the UK’s army of frustrated homebuyers, but a co
