New mortgage lending up 20% in Q3: FSA

New mortgage lending increased by 20% to £40bn in Q3 compared to Q2 but it is still well down on the £61bn advanced in Q3 2008, according to FSA figures.

The total value of outstanding loans is now £1.2bn, an increase of 1% compared to a year earlier.

Lending for house purchase continues to represent an increasing share of new lending, accounting for 57% of new advances and 62% of new commitments in Q3.

Remortgages accounted for 34%, the lowest proportion since the data was first released in 2007. The proportion of new lending at an LTV of more than 90% continued to fall and accounted for less than 2% of new advances in the quarter.

The use of combinations of high LTVs and high income multiples also continued to decrease, down to 1% of new lending in Q3. The proportion of loans to borrowers with an impaired credit history remained unchanged from Q2, at a series low of 0.4%.

Meanwhile, the number of new arrears cases continued to fall, down by 10% in Q3 to 46,000. At the end of Q3 the number of accounts in arrears had fallen to 395,000, a decrease of 2% during the period, but 16% up on Q3 2008.

The number of new possessions totalled 14,000, a 2.8% increase on Q2, but some 5% below the peak at the start of the year.