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Movers spend lowest ever average proportion of income on their mortgages
Borrowers moving home in May saw their mortgage interest payments accounting for the lowest proportion of their income in 35 years, according to new data from the Council of Mortgage Lenders.
And house purchase lending rose from a year ago for the 11th consecutive month. But with the challenging economic backdrop, government spending cuts and forthcoming tax increases the positive trend is likely to tail off in the second half of this year. Monthly comparisons with a year earlier will probably be near zero or modestly negative over the coming months. This is because we had an improving market in the second half of 2009 as the stamp duty holiday came to an end.
House purchase lending rose modestly in May. The 42,000 loans (worth £6 billion) were up 2% in volume and 3% in value on April and 15% in volume and 28% in value from a year earlier.
Remortgaging activity recovered a little as well in May. The 26,000 loans (worth £3.2 billion) were up 6% by volume and 10% by value on May but down 14% by volume and by value on a year earlier.
The numbers of home movers increased as well in May. The 27,100 loans were up from 26,500 in April and 22,800 in May 2009.
The characteristics of these borrowers have also barely changed recently but they continue to benefit the most from low interest rates with interest payments accounting for only 9.5% of their income in May, the lowest percentage in 35 years of available data.
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