Mortgage lending continues boom

More buyers want a foot on the property ladder, the CML says

The UK's appetite for mortgage debt continued rising in April, but existing borrowers showed growing caution.

Mortgage lending in April totalled £25bn - 25% higher than the same month last year and 1% more than March, the Council of Mortgage Lenders (CML) said.

But there was a marked drop in people mortgaging to release cash from their property or to get a better rate.

Remortgaging slowed to 33% of the total market, the lowest level since September 2002.

At £9.2bn the value of remortgaging fell from £10.1bn in March, and was 5% lower than last April's figure of £9.7bn. Then it accounted for 49% of new lending.

Equity boom

In recent years, many homeowners have made good use of historically-low interest rates and remortgaged to a cheaper deal, cutting their mortgage costs in the process.

Others have used remortgaging as a cheap borrowing vehicle, for example, to consolidate debts or to provide finance for home improvement projects.

But debt experts are concerned that some homeowners may have overstretched themselves.

CML said April's figures seemed to indicate the remortgaging boom, a trend since the late 1990s, was "flagging".

"If so, then this would be a helpful pointer towards the likelihood of a soft landing for the housing market," said CML director general Michael Coogan.

Higher interest

Separate data on mortgage lending from the British Bankers' Association (BBA) painted a rosier picture.

It said UK mortgage lending rose £6.4bn in April - its fastest pace of growth since records began in 1997.

Earlier in the week it emerged the Monetary Policy Committee (MPC), the Bank of England's rate-setting body, debated lifting rates to 4.5% from 4% at its May meeting, before settling on a rise to 4.25%.

Its publication has fuelled expectations that the bank will act soon, raising rates further.