Early 2013 hit by mortgage dip

MORTGAGE lending fell by £1.5bn between the first quarter of 2012 and 2013, the Bank of England said yesterday, sliding to £35.5bn.

The value of new commitments fell 4.3 per cent on the figure from twelve months earlier, with net advances in the first quarter cut by over half.

The share of lending going to new mortgages fell to 63.4 per cent of advances, with more now made up of people re-mortgaging, which stands at 29.4 per cent.

The average interest rate on loans issued in the first three months of this year was 3.65 per cent, down slightly on the 3.81 per cent seen over the same period in 2012.

There were also some worrying signs for the market: the number of new arrears cases in the first quarter was 5.8 per cent higher than in the last quarter of 2012.

The rate of arrears for residential loans was unchanged at 2.4 per cent.

There has been some evidence of increased activity in the property market generally since chancellor George Osborne announced the Help to Buy scheme in the March budget. Since these figures are for January to March, very little of any such effect would be included.

Data for house sales in May, released yesterday by the Royal Institution of Chartered Surveyors (RICS), suggested that the effect of the scheme could already be seen. RICS said sales were at their highest point since January 2010.

Brian Murphy, of the Mortgage Advice Bureau, said: “We are starting to see queues forming, as the burst of activity draws people’s attention to a window of opportunity”.