The number of loans handed out for house purchases in the UK rose by 16% in April compared with the previous month, according to lenders.
But the figure remains 28% down on the same month the previous year, the Council of Mortgage Lenders (CML) said.
The data adds further evidence to indications of a spring bounce in the housing market.
However, first-time buyers still have to put down an average deposit of 25% of the value of their new home.
In April, the average amount borrowed by first-time buyers for a home loan rose slightly to £96,000 – the first rise since May 2008.
The data is the final set of figures relating to the state of the mortgage market in April, and effectively echoes lending data from earlier surveys.
The figures confirmed a rebound in the popularity of fixed-rate mortgages, with homeowners predicting that interest rates are unlikely to fall further.
In January, 48% of new home loans were fixed-rate deals but this proportion rose to 69% in April. The average rate charged on those deals in April – of 4.83% – was the lowest paid since January 2004.
“With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer term periods of five to 10 years,” said CML head of research Bob Pannell.
“With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable-rate deals.”
“What concerns me is that many people coming to the end of their existing mortgage products are still reverting to, or being forced to revert to the standard variable rate, which could come back to bite them should rates rise sharply.”
Rising interest rates would have a positive impact for savers, however, who would see returns they receive from their savings accounts go up.
Source: http://news.bbc.co.uk/1/hi/business/8094698.stm
11th June 2009