Gross lending increased by 8% in April to £26.1 billion, from £24.1 billion in March, after two consecutive months of decline. This was 5% down from April 2007, but this annual rate of decline was lower than in recent months; gross lending in March 2008 was 24% lower than March 2007.
There were 50,700 loans for house purchase worth £7.7 billion in April, up 9% in volume and 10% in value from March. There were 18,500 loans to first-time buyers, up 4% from March but 36% lower than April last year. There were 32,300 loans to home movers, up 13% from March and 38% lower than April last year.
Fixed-rate loans became more popular in April suggesting that borrowers are looking for security over future mortgage payments. The proportion of borrowers taking out fixed-rate products increased to 59% in April, from 54% in March. This is the largest proportion since December last year.
There are clear signs of lenders tightening lending criteria in the face of ongoing funding constraints and a softer house price outlook. The average first-time buyer put down a deposit of 13% in April, which is the highest level in over 3 years. First-time buyers typically took out loans for 3.3 times their income, down from 3.35 in March. The average home mover loan was 2.96 times their income, down from 3 in March.
Remortgaging accounted for 42% of gross lending in April and has continued to perform better than house purchase as large numbers of borrowers exit fixed-rate mortgages. There were 83,000 loans for remortgage worth £11 billion, up 14% in volume and 11% in value from March.
