Home loans on the rise as interest levels remain low
Lenders have said that they have seen a rise in the number of home loans in May, as low interest rates continue to attract home movers.
The amount that is being spent repaying home loans is at the lowest level in 35 years and home movers continue to benefit the most from the reduced interest levels, according to the Council of Mortgage Lenders (CML).
There were around 42,000 home loans approved in May, which is 15% higher than the same period last year and is up 2% on April.
Interest payments in May only accounted for 9.5% of the average household income according to the report but the CML predicts that mortgage borrowing will start to slow down throughout the rest of 2010.
The increase in the limit at which borrowers needed to pay stamp duty last year was attributed to an increase in home loans, but as this has now been reduced to normal levels it isn’t expected to increase the figures this year.
CML Director General, Michael Coogan, said: “Activity picked up in the second half of 2009 due to the stamp duty holiday, but, with the Government’s austerity drive picking up momentum, we are unlikely to see a repeat of those buoyant numbers this year.”
More people are also moving home with 27,100 new home loans granted to those moving home during May – up 2% on April and 19% higher than 2009.
A small rise was also reported for first time buyers and on average borrowed 75% of the value of their new home and the interest payments only accounted for 13.2% of their income, the lowest level since 2004.
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