House purchase loan volume up by 14% in October

October saw an increase of 14% in the volume of house purchase loans, and a 10% increase in value, compared with September, new data from the Council of Mortgage Lenders (CML) has shown.

Despite an annual decline of 52% in volume and 57% in value, research by the CML showed there were 39,900 house purchase loans in October.

The rise in house purchase lending was evenly spread across first-time buyers and home movers. There were 15,400 loans to first-time buyers and 24,500 home mover loans in October, up 15% and 14% respectively from September.

The CML said a modest rise would typically be expected between September and October, however, uncertainty in the summer over a stamp duty holiday may also have inflated October completions, compared with September.

There were 70,000 remortgage loans worth £9.4 billion, an increase of 12% in volume and 11% in value from September and a decline of 31% in volume and 28% in value from October 2007.

Gross lending rose slightly to £18.6bn, up 6% from September but 44% lower than October last year.

Michael Coogan, CML director general, said lenders were facing “conflicting pressures to recapitalise against possible future losses, service government's preference shareholdings at 12%, pay a premium to access the Bank of England Special Liquidity Scheme, show forbearance to borrowers in arrears, follow base rate moves down to help their existing borrowers, keep savings rates high to support existing savers, and provide competitive rates to new borrowers and savers to maintain economic activity in a recession.

“And they are supposed to ensure their long term financial stability to help the UK economy rebuild itself when we are out of the recession,” he added.

Coogan said the government needed to decide on its key priority. “Current policy objectives are conflicting and incoherent. The tug of war with lenders being pulled in every direction at once needs to end.”