Mortgage supply still restricted

According to the latest figures published today by the Council of Mortgage Lenders (CML), the mortgage market is still showing signs of a slowdown.

Just 52,700 loans for house purchases were approved in May – down by 44 per cent on the CML's results for May 2007. However, this figure does represent a four per cent increase on the number of mortgages approved in April.

Home loan approvals for first-time buyers are also below figures from last year. Some 19,200 mortgages were approved for first-time buyers in May, down by 41 per cent from the same month last year. The CML also found that the average first-time buyer typically borrows 3.3 times their income.

Between April and May there was also a "steep decline" in remortgaging, with figures down 14 per cent over the course of the month. The value of remortgages fell by 13 per cent in May to £9.6 billion.

CML director general Michael Coogan explained: "Lending levels continue to be lower than last year and any recovery is still some way away, with little sign of the special liquidity scheme increasing the flow of funds to the industry or lowering the cost of funds as hoped."