The number of homeowners looking for fixed-rate deals on their mortgages increased considerably during April, according to the Council of Mortgage Lenders (CML).

Statistics released from the group, which is made up of members responsible for the provision of around 98 per cent of mortgages in the UK, suggest that the number of people looking for fixed-rate mortgage loans rose to 59 per cent during the month. This is the highest proportion of borrowers seeking such deals seen since December 2007.

The group noted that signs point to a marked tightening in lending criteria and a soft performance in the housing market. An average first-time buyer applying for a mortgage in April put down an initial deposit of 13 per cent, which is the highest percentage seen in three years. For those looking for a way to raise the capital necessary to put down a larger deposit, taking out a secured loan may prove a beneficial course of action.

Other indicators of a constricted lending environment were statistics reporting that people typically took out loans worth 3.3 times their income on average, down from 3.5 times in March. Furthermore, the average homemowner loan was said to amount to 2.96 times average salaries, down from three in March.

However, there was an overall increase in loan volumes, with gross lending rising eight per cent during the course of the month to reach 26.1 billion pounds. In March, that figure stood at 24.1 billion pounds. It is the first rise in gross lending recorded in three months. When compared with the same period last year, lending decreased five per cent, although this significantly reduced the steady decline in comparative annual figures; in March 2008 gross lending was down 24 per cent against the previous year.

In total, there were 50,700 successful loan applications for house purchase, worth 7.7 billion pounds. These figures represent a rise in both volume and value from March figures. Furthermore, more loans were approved for first-time buyers, with 18,500 mortgages allowing people to get on the housing ladder. While this figure represents a four per cent rise from March figures, it is 36 per cent lower than the number of approvals recorded in 2007.

CML director general Michael Coogan commented: “Monthly house purchase lending volumes continue to be lower than last year’s levels and there will be a further weakening in coming months as recent approvals data has shown. The squeeze on mortgage funding has led many lenders to tighten their lending criteria. While tighter criteria make it more difficult for some borrowers to obtain a mortgage, they also reduce risk in a slower housing market. There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished.”

Back in April, the CML urged consumers to be mindful of the fact they were likely to see increases in their monthly mortgage repayments as cheap fixed-rate deals came to an end. Homeowners were advised to plan ahead in an effort to reduce the impact of this increased obligation.

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