Demand for mortgages on the increase

Mortgage lending reached a record level of ?161bn in 2001, according to a report out today.

The Council of Mortgage Lenders (CML) said in its annual report that mortgage lending had increased by 34% last year with over 11 million mortgages being held by two-thirds of households across the UK.

The CML said that continuing economic growth, low unemployment and falling interest rates had underpinned demand for housing and mortgages.

Growth looks set to continue this year, as the CML announced last month that the number of people taking out mortgages or remortgaging property reached a record high in March of ?16.6bn.

The number of mortgages arrears and repossessions continued to decline last year, said the CML, with just over 18,000 properties taken into possession last year, a 20% decline on the year before.

The report also said that equity release, where homeowners can unlock cash from their home for use on such things as home improvements, is likely to become a growth area.

"Equity release has real potential to use growing property wealth to fill the gaps in pension provision created by poor stock market returns, for an ageing UK population," said Roger Burden, CML chairman.

The CML said in 2002 it will be concentrating on promoting sustainable home ownership. As part of this process it will be urging the government to examine the contribution it could make toward strengthening the safety net for borrowers, including ways in which it might offer more protection against uninsurable risks.

The organisation said it will also be pressing for the introduction of a housing tax credit to ensure that homeowners on lower incomes receive the same amount of support from the state as tenants.