Lenders have recently dished out more loans for Brits buying new property, increasing the number of first time buyers entering the market. Estate agents and homeowners are growing increasingly optimistic even though remortgage loans have decreased.

New research by the Council of Mortgage Lenders (CML) claims loans for Brits wanting to purchase new homes increased from April to May. However loans for remortgage were down a staggering 23 percent from May 2007.

The study claims that the increased number of loans for property buyers rose in volume by 4 percent and in value of 2 percent to £7.9 billion. Although these figures remain 44 percent lower than statistics last year, it has led to a gradual increase in the number of first time buyers hitting the market.

According to the report, first time buyers stepping onto the ladder increased by 19, 200 since April. Once again however this is a significant decrease from last year’s numbers which welcomed 46 percent more first time buyers on the market.

Unfortunately the report predicts that loans for house purchases will soon decline over the next few months.

More bad news- loans for remortgages have declined by 23 percent since May 2007 and were down £9.6 billion in May.

The study supports recent claims that Brits are increasing opting for fixed rate mortages, for peace of mind over future payments in these uncertain times. This is despite news that fixed rates are actually increasing: Read more (yesterday’s news story).

“The growing popularity of fixed-rate mortgages, despite the relatively high rates, suggests that many borrowers are prioritising certainty in their monthly payments,” explains CML director general Michael Coogan.

“Lending levels continue to be lower than last year and any recovery is still some way away,” says Coogan.

Coogan adds that there is “little sign of the special liquidity scheme” which would increase the flow of funds into the industry and lower the cost of lending.

However in a separate study by Abbey Mortgages Estate agents and homeowners are more optimistic. The study reports that 61 per cent of estate agents expect house price falls to stop within 12 months and homeowners expect prices to stop falling in just 7 months.

“Estate agents and homeowners believe that, despite current movements in house prices, we are unlikely to experience a really prolonged period of house price falls,” explains
Phil Cliff, Director of Abbey Mortgages.

“While this is 'light at the end of the tunnel', it implies that estate agents and homeowners are bracing themselves for further falls in the very near future,” concludes Cliff.