11 March 2008, 13:31  House purchase loans in the UK decreased in January

House purchase loans in the UK decreased in January as buyers became more cautious amid a slowing economy and tighter credit conditions, the Council of Mortgage Lenders said. The value fell to 7.8 bln stg in January from 9.4 bln stg in December and 11.2 bln a year ago. On average, first-time buyers took out loans for 88 pct of the property's value, down from 90 pct in December, and borrowed 3.32 times their income, down from 3.38 in December. The only corner of the property market that remained buoyant was re-mortgaging, with 85,000 contracts in January, up 43 pct from 59,000 in the previous month. Borrowers moved away from fixed-rate products towards trackers, reflecting consumer expectations of further interest rate cuts this year. Fixed-rate loans totaled 57 pct of loans in January, down strongly from 77 pct in June and July 2007. "The wholesale funding markets remain largely closed and mortgage funding still remains constrained," said Michael Coogan, director general of the CML.

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