Mortgage lending still picking up

The revival in activity in the housing market is continuing

Mortgage lending to house buyers picked up again in May, according to the Council of Mortgage Lenders (CML).

The number of home loans for house buyers rose by 4% in the month to 37,400, although that was still 28% lower than a year ago.

First-time buyers are still having to put down an average deposit worth 25% of their home's value.

But the CML said 80% of first-time buyers under the age of 30 were receiving finance from their parents.

"The bank of mum and dad remains an apparently important source of help for young first-time buyers," said CML economist Paul Samter.

"Some mortgage products specifically reflect this fact, and again we may begin to see more products that echo this phenomenon," he added.

Rationing

Some higher loan-to-value products came onto the market in recent months Council of Mortgage Lenders

The past year and a half has seen a dramatic rationing of mortgages by lenders, in response to the shortage of funds sparked by the banking crisis.

However, the CML predicted that lenders might become slightly more relaxed in the coming months.

"We might expect to see a modest easing over the summer, as some higher loan-to-value products came onto the market in recent months," the CML said.

"Lenders reported that they intend to increase lending at higher loan-to-value ratios in the Bank of England's recent Credit Conditions survey."

Nearly three-quarters of all new mortgages are being taken out at fixed rates, the highest proportion since August 2007.

The CML said borrowers were protecting themselves against possible interest rate increases in the future.

With mortgage approvals still rising, the number of loans granted, and completed sales, are all likely to stay on their upward trend over the summer.