House purchase lending edges up, remortgaging declines

The number of house purchase loans ticked up in February, according to new data from the Council of Mortgage Lenders.

There was a shift away from tracker products towards fixed rates, with 56% of new loans at fixed-rate, up from 49% in January, while 31% were tracker products, down from 38% in January.

An increased proportion of homebuyers are not paying stamp duty as a result of falling house prices and the temporary raising of the nil-rate threshold. In February 57% of all house purchase loans did not incur stamp duty, compared with 48% a year earlier.

Michael Coogan, CML director general, said: "These figures represent February mortgage completions. Recent mortgage approvals figures published by the Bank of England show some signs of improvement at the beginning of the borrowing process, although activity is at a very low level historically. We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year.

"Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own. We need further market measures to be introduced by the government around the Budget to encourage a mortgage market where all types of lenders - banks, building societies and specialist lenders, and large and small businesses - are encouraged, and enabled, to commit more funds to the mortgage market if we are to enhance lending activity significantly."