LONDON (ShareCast) - The number of house purchase loans grew by 16% to 35,600 in April from the month before, although that's still 28% down on the same time last year.
Loans to first time buyers were up 11% month-on-month to 13,500, according
to the Council of
Mortgage Lenders (CML), while
loans to home movers rose 19% to 22,100.
Remortgaging proved less popular, with loans down 22% in April from March and a whopping 65% less year on year.
Homeowners reaching the end of their current deals are choosing to stay on historically cheap standard variable deals, some as low as 2.5%.
Those who do commit to a new product are likely to pick a fixed-rate mortgage, with 69% of borrowers, the highest number in a year, locking into a fixed deal at an average 4.83%.
"With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of 5-10 years," said CML head of research, Bob Pannell.
"There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices."
Howard Archer, chief UK economist at IHS Global Insight, urges caution, warning that despite the recent pick up in the housing market, mortgage activity is still at a level normally associated with falling prices.
"Despite markedly rising buyer interest, we believe that the pick up in actual house purchases is likely to be be gradual and fitful for some time to come given ongoing tight credit conditions and still relatively poor economic fundamentals," Archer said.
He thinks house prices will fall by another 10% from current levels to trough around mid-2010.
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