Sharp fall in mortgages for house purchases

Posted under General by Michael

The government’s efforts for the revival of the housing market have not encouraged first-time buyers to avail mortgages for house purchases. According to data from the Council of Mortgage Lender’s (CML), only 35,000 loans were approved during September.

The number of new loans for first time home buyers was down by 15% in September compared with that in August. The figures were almost 50% less than September 2007, when 80,000 deals were approved by lenders.

The CML data also reveals that average value of first-time buyer loans dropped from £108,000 in August to £104,500 in September 2008, much below last year’s price of £119,250.

In the last three months to September, total number of first-time buyers went down to 44,500 against 164,400 during same period in 2001 at the market peak.

Government has tried to help aspirants of house ownership by raising limits for stamp duty payments to £175,000. 51% of buyers availed of this benefit in September 2008 compared with 22% who were exempt from payment of any stamp duty in September 2007.

CML also noted that in September only 62,000 borrowers applied for remortgage deals against 74,000 in August, amounting to 15% fall. The figures are reflecting lenders’ tactics to reduce risks.

According to the CML, limited availability of funds is making it difficult for the building societies and banks to support homeowners despite their eagerness to help them.

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