The positive news on the housing market comes after a torrid few months for the UK housing market, but, according to new data from the Council of Mortgage Lenders there were 24,300 house purchase loans worth £3.1 billion transacted in February 2009, compared with 23,400 loans worth £3.1 billion in January - a 4% increase.

But historically, housing market activity remains very weak, running at around one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007.

Housing Market Trends for February

The Council of Mortgage Lenders results show that remortgaging declined steeply in February however, with 35,000 remortgage loans, down from 44,000 in January- a 20% decline.  It is expected that demand for remortgaging will remain muted as lenders’ standard variable rates are attractive compared to new mortgage pricing, and house price falls continue to erode equity levels which will exclude some borrowers from the best remortgaging deals available to those with large deposits.

Housing News: First Time Buyers Increase, But Still Low

There were 9,400 loans to first-time buyers - a 7% monthly increase -but significantly less than the 17,400 in February 2008.

The major barrier for first-time buyers entering the housing market is the tight lending criteria to most first-time buyers adopted by the leading lenders. First-time buyers typically had a deposit of 25% in February, a new record. Such amounts remain out of reach for all but the most affluent buyers, however, for example people returning to home ownership after a period of renting or divorcees, or those who get financial assistance from their family.

First-time buyers typically borrowed 2.95 times their income, down from three times in January, 2009. The average first-time buyer loan was £95,000, down from £97,000 in January and £114,000 in February last year. This decline reflects the change in house prices over the same period and the growth in the size of first-time buyer deposits.

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