The number of house sales and new mortgages increased slightly in May, according to the Council of Mortgage Lenders (CML).
Loans for house purchases and remortgaging both grew slightly. There were 41,500 loans for house purchases, up from 40,800 in April, though the total loan value for each month was the same at £5.9 billion. However, despite the increase the amount and levels are still below last years’ levels.
Remortgage lending also increased slightly in May with 29,000 loans advanced, compared to 24,700 in April. Compared to May last year remortgage lending has increased by nine per cent in value, but is still below the peak of March 2011.
Most new borrowers opted for fixed rate mortgages despite the continued low level of interest rates, perhaps because of uncertainty over the future of interest rates and to have the security of fixed payments in a time of rising inflation.
Chris Gardner, a mortgage expert from Obligo said: “The extreme caution of borrowers is highlighted by the popularity of fixed rate mortgages despite the fact that rates are unlikely to rise any-time soon.”
“Many households are in a position such that they cannot even afford to gamble on rates. They have to play a conservative hand and opt for a fix.”