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CML: Mortgage lending down in September

Tuesday, 13 November 2007 12:00 AM

There was a fall in total mortgage lending in the UK housing market during September, according to figures released today by the Council of Mortgage Lenders (CML).

A total of £30.6 billion was lent during September, some £3.4 billion less than August's total.

However, the September lending figures are higher than for the corresponding month in 2006, when £29.2 billion was lent.

The amount lent for home purchases was also lower.

Some £12.7 billion was lent for home purchases in September, lower than both the previous month (£16.2 billion) and September 2006 (£13.9 billion).

Higher lending costs are partially to blame for the fall, according to the CML.

The average mortgage rate was 6.02 per cent in September, up from 5.91 per cent in August.

As a result affordability fell across the market.

First-time buyers now spend 20.4 per cent of their income on mortgage repayments, compared to 20 per cent in August.

There were 28,400 loans to first-time buyers, worth £3.8 billion during September, compared to 34,800, worth £4.7 billion, in August.

Similarly the amount paid by house movers on mortgage repayments increased, up from 17.3 per cent in August to 17.5 per cent in September.

In contrast, however, lending for remortgaging increased.

Up to £11.1 billion was lent for remortgaging in during September, compared to £11 billion in August and £10 billion in the same month during 2006.

"The data shows higher interest rates are now beginning to slow the housing market, in line with our recently published forecasts," said the CML's director general Michael Coogan.

"Looking forward, we expect remortgaging to continue to hold up as borrowers coming off fixed rate deals look to re-finance.

"However, market conditions may mean mortgage customers see an increase in costs, and the Bank of England's decision not to reduce rates earlier this month will have disappointed many borrowers."

The CML also expects the market to slow in the mid-term.

"Looking forward, affordability is likely to continue to constrain buying activity, which we expect to remain subdued.

"But rates have now reached their peak and a move downwards will help ease some of the pressure on household finances," concluded Mr Coogan.

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