Mortgage lending up 45% in a yearMore mortgages extended to first-time buyers

17 May 2010

For Sales signs on a road

Get a legally binding agreement drawn up

The number of mortgages advanced for house purchases in March 2010 was up 45% compared with the same month in 2009, according to new statistics from the Council of Mortgage Lenders (CML).

45,000 home loans were drawn down by borrowers in March, its data shows, representing an increase of 25% from the volume of mortgages advanced in February.

The number of first-time buyers in receipt of mortgages rose 27% to 17,300, while loans to house movers increased by 11% to 22,600.

First-time buyer mortgages

According to the CML’s report, first-time buyer activity is now rebounding faster than home-mover activity, with loans worth £2bn advanced in March 2010.

March also saw first-time buyers borrow an average of 76% of their property’s value for the second month running. This is the first time average deposits for first-time buyers have been lower than 25% for more than one month since January 2009.

However, as the CML’s document points out: ‘Only time will tell if this genuinely reflects a tentative sign of easing’.

Thanks to deposit constraints that ‘remain tight in all areas of lending’, most lenders still reserve their best mortgage rates for customers who are able to put down around 25% of their property’s value up-front. This leaves many first-time buyers frozen out from affordable mortgage deals while they struggle to build up the large deposits required. 

Remortgages, fixed-rate and tracker mortgages

Remortgaging numbers were up 23% in March 2010 compared with the previous month, but were down by 29% year-on-year, the CML says.

It expects the remortgage market to remain weak for some time, despite the continuing trend of recovering house purchase activity.

In terms of the types of mortgages chosen by borrowers in March, only 46% of new home loans were fixed-rate deals. While this represents little change in the popularity of fixed-rate deals since the start of 2010, it shows they have fallen from favour since the final months of 2009. Back then, 60% of the home loans advanced were fixed-rate mortgages.

Tracker mortgages accounted for 37% of new mortgage lending in March, up from a low of just 12% in July 2009.

Find the best mortgage deal for you

If you’re on the hunt for a new mortgage deal, why not compare deals using the Which? mortgage calculator? It’s one of the few tools on the web that allows you to look at the total cost of the mortgage deals you’re considering, taking fees and charges into account as well as the headline interest rate.

If you’re confused about which type of mortgage to go for, you might also want to read our Mortgage basics and Mortgage deals explained advice guides. These are particularly useful for first-time buyers in need of an introduction to mortgage borrowing, or for people who aren’t sure whether a tracker or fixed-rate deal will suit them best.

pound coins

Which? Money when you need it

You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.

Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.

Or for money-saving tips, and news of how what's going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast

For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.