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Facts About Mortgage Lending

By: Emma Eilbeck BA (hons) - Updated: 4 Dec 2012 | comments*Discuss
Mortgage Lending Mortgage Lenders

Figures on mortgage lending are changing on a monthly basis and do not make for comfortable reading, they seem to be going one way at the moment and that is down.

Mortgage Being Taken Out

The Council of Mortgage Lenders is the main trade body for mortgage lenders. They represent the majority of the lenders in the mortgage market and compile data regularly about how much lending and what type of lending they are doing.

Overall, gross mortgage lending fell by roughly £12.4bn in January 2008, which was an 8% fall from £13.5bn in December 2008 and around a 52% fall from January 2007, this was a lowest monthly figure since April 2001.

Low levels of mortgage lending is bad news for first-time buyers, as the lower the level of lending the less chance you have of being offered a mortgage.

When lending figures fall it normally means that lenders are getting choosy about who they will lend to.

The CML is not the only professional body to release figures on the mortgage market. It can be quite hard to calculate the exact number of mortgage approvals, so sometimes data can conflict.

The British Bankers Association also produces its own figures for mortgage approvals.

It s figures seem slightly more positive and it found that mortgage approval activity for January 2008 increased slightly to £7.6bn but still fell almost 60% from the same time in 2007.

Types Of Lending

Figures from the CML show remortgaging declined by 26% from November 2008 to December 2008, while the number of first-time buyers entering the market are also declining. In December 2008 there were 12,100 loans to first-time buyers worth £1.4bn, this is the lowest level since its records began in 2002.

First-time buyers were on average putting down a deposit of 22% in December, the highest deposit payment for 34 years.

The average first-time buyer is also roughly borrowing 3.1 times their income and spending 17.1% of their income on interest payments.

The type of mortgage products that borrowers are opting for is also changing. Tracker mortgage products saw a healthy increase in 2008, jogged on by the declining interest rate.This type of mortgage product accounted for around 29% of all new loans, compared with only 16% in 2007. Fixed rates are still the most popular choice for first-time buyers though, with 58% of new loans in 2007 fixed rates, although this was still down from 73% in 2007.

Specialist Lending

Buy-to-let lending used to be one of the most popular types of mortgage for investors and amateur landlords to take out, but since the credit crunch has taken hold buy-to-let lenders have become a lot more reluctant to lend.

New lending for buy-to-let continued to decline in the fourth quarter of 2008, figures from the Council of Mortgage Lenders show.

There were some 37,000 new loans, worth £3.9bn , this was 12% down on the third quarter, and 56% down compared with the fourth quarter of 2007.

This again is another record low level of lending and the lowest since the Council started compiling the data in 2003.

Over 2008, buy-to-let lending accounted for 10.6% of the value of total gross mortgage advances, this was down from 12.3% in 2007.

Mortgage facts and figures do not make for happy reading at the moment, the market has shrunk dramatically and the number of available deals are slowly fading. It will only be a matter of time though before mortgage facts and figures make for happier reading.

The mortgage lending market will not stay down forever it is merely nursing its wounds before it returns.

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