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August 12, 2009

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UK home market begins to stabilize

BRITAIN'S housing market is slowly stabilizing, though activity is still low compared to previous years due to the recession, industry bodies said yesterday.

The Council of Mortgage Lenders said gross mortgage lending in the United Kingdom rose by 23 percent in June compared to the previous month but still lagged at about half of year-ago levels.

The trade association for the mortgage lending industry said there had been 45,000 house purchase loans for a total of 5.9 billion pounds (US$9.7 billion) in June - up from 36,500 loans in May.

Government statistics showed that house prices rose 2.6 percent in the quarter ending June 2009, after falling 3.8 percent in the quarter ending March 2009.

While that left average house prices 10.7 percent lower than last year, the overall rate of the fall has slowed from a 12.7 percent year-on-year fall in May, according to data released by the Communities and Local Government Department.

Council of Mortgage Lenders economist Paul Samter said low interest rates and realistic selling prices had helped house sales, but added "there is some way to go before we reach normal levels of activity."

There were 34,000 remortgage loans - loans taken out against existing property - approved in June. That was 13 percent higher than the previous month but still lower than normal. There were 96,000 remortgage loans approved in the second quarter of the year - 21 percent lower than the previous quarter.

First time buyers appear to be re-entering the market, taking out a total of 17,200 loans worth 1.9 billion pounds in June, up from 13,700 loans in May but down from 18,400 in June 2008. The typical buyer has a 25 percent deposit, unchanged since February.


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