But there is good news for borrowers. According to the figures, the average rate on mortgages advanced in February fell to 3.83%, from 3.90% in January, and has declined each month from 4.34% last August. The largest falls have been on shorter-term fixed rates. The average rate on all outstanding loans was unchanged at 3.67% in the month. This is slightly higher than the low of 3.56% in October, but still extremely low on any historic comparison and is likely to help keep arrears rates relatively low.
Commenting, Rubinsohn, RICS chief economist said: “The weaker trend is in part a response to the rush to push through house purchases before the end of last year to take advantage of the stamp duty holiday. The particularly poor weather in the early part of 2010 may have also contributed to the disappointing level of activity in the first two months of this year.
"This trend is likely to be at least in part reversed over the coming months helped both by the budget announcement of a stamp duty holiday for first time buyers as well as a continuing pick-up in instructions from vendors. Lack of mortgage finance and uncertainty stemming from the approach of the general election will remain a drag on activity but our suspicion is that mortgage approvals will still climb back above 50,000 per month during the spring."
CML senior economist Paul Samter agrees: “This is very much in line with the CML forecast for activity to remain subdued early in the year in light of the rush to beat the end of the stamp duty holiday late last year, and uncertainty over the economic and political outlook. The new stamp duty exemption for first-time buyers on properties up to £250,000 is likely to boost activity in the coming months, although it is extremely difficult to assess how many potential buyers will qualify and what the impact will be.
“Remortgage activity picked up a little, with 27,300 loans approved in the month, a 12% rise from January but down 21% on a year earlier. The CML continues to expect refinancing activity to remain subdued throughout most of this year with official interest rates (and therefore most variable mortgage rates) unlikely to rise for some time yet.
“Gross lending came in very close to the CML's £9.2 billion estimate at £9.3 billion (nsa) while net lending, on an unadjusted basis, was in modestly negative territory in the month - however, the seasonally adjusted figure was £1.6 billion, a similar level to that seen in recent months.”
