More affordable mortgages fail to lift housing market

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The housing market suffered a fall in activity in October, new figures revealed, despite mortgages becoming more affordable than at any time for eight years.

There were 44,500 loans worth £6.5bn issued in the month, according to the Council of Mortgage Lenders (CML), which was eight per cent down on the previous month and five per cent less than a year ago.

The fall in lending came even though low rates mean first-time buyers now have to pay only about 12.3 per cent of their income on interest payments, the lowest level since January 2004..

Lending levels were constrained because mortgage providers are still demanding average deposits of around 20 per cent and the uncertain economic outlook hit confidence.

CML director general Paul Smee is hopeful there will be signs of increased activity early next year before a stamp duty concession for first-time buyers finishes at the end of March.