Mortgage market shows signs of life

The mortgage market has shown welcome signs of life with a 30 per cent increase in remortgage loans taken out year on year.

The figures from the Council of Mortgage Lenders (CML) are for August, and show that lending for house purchasing also rose slightly year on year, even for first time buyers, who have found the financial crisis particularly tough.

Nevertheless, the first time buyers that are managing to get onto the property ladder are putting down a 20 per cent deposit.

Meanwhile, as interest rates remain at record lows, home movers paid just 9.4 per cent of their income on mortgage payments in August - the lowest since monthly records began in 2002.

Commenting, Paul Smee, director general of the CML, said: "Even though it is impossible to ignore the knocks to confidence emanating from the Euro zone, August lending showed welcome signs of life. With those moving house experiencing a record low in the proportion of their income needed to pay their mortgage interest, it is clear that the low rate environment is a benefit to those with mortgages, even against the backdrop of the gloom in the wider economy."

Despite this, the housing market remains relatively flat according to the Royal Institute of Chartered Surveyors (RICS), as fewer vendors put their homes up for sale during September. According to RICS housing spokesperson Micahel Newey:

"Falling supply of fresh stock is indicative of general fears overhanging the economy, with many potential sellers preferring to stay put for now. As a result, the UK housing market remains pretty flat with activity level generally subdued."