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July house purchase lending highest since August 2010

Published: 12 September 2011

Overall lending for house purchase rose by both volume and value in July compared to the previous month, according to data released today by the Council of Mortgage Lenders. The value increased from £6.9 billion to £7.3 billion and the volume from 47,800 to 48,800. Both were at their highest since last August, though lower than July 2010.

By contrast, remortgaging rose both on a monthly basis, and on the same month last year. There were 31,500 remortgages worth £4 billion in July, up from 31,300 worth £3.8 billion in June.

Table 1: Loans for house purchase and remortgage

  Number of
house purchase
loans
Value of house
purchase loans
£m
 
Number of
remortgage
loans
 
Value of
remortgage
loans, £m
 
July 2011 48,800 7,300 31,500 4,000
Change from June 2011 2% 6% 1% 5%
Change from July 2010 -12% -13% 11% 11%

Lending to first-time buyers hit its highest level in a year in July. The value rose to £2.3 billion, from £2.2 billion in June and was the highest monthly total since last July (£2.4 billion). By number, there were fewer loans to first-time buyers - 18,200 first-time buyer loans, down from 18,500 in June and 19,500 in July 2010.

Table 2: First-time buyers, lending and affordability

 

Number of
loans

Value of
loans
£m

Average
loan to value

Average
income multiple

Proportion of
income spent on 
interest payments

July 2011 18,200 2,300 80% 3.18 13.1%
Change from June 2011 -2% 5% 80% 3.22 13.4%
Change from July 2010 -7% -4% 79% 3.23 13.3%


Both the number and value of loans to home movers increased in July. 30,600 loans were advanced – up by 4% compared to the previous month, while the value totalled £5 billion – up by 6% compared to June. Compared to July last year lending to home-movers was down by 15% (17% by value).


For another month both first-time buyers and home movers experienced little change in lending criteria. Average deposits for first-time buyers have held steady at 20% for most of 2011 and they typically borrowed 3.18 times their income in July, down from 3.22 in June. Home movers borrowed on average 69% of their property’s value in July, down from 70% in June, but this figure has fluctuated by no more than three percentage points for nearly three years.

Table 3: Home movers, lending and affordability

 

Number of
loans

Value of
loans
£m

Average
loan to value

Average
income multiple

Proportion of
income spent on 
interest payments

July 2011

30,600

5,000

69%

2.87

9.6%

Change from June 2011

4%

6%

70%

2.88

9.9%

Change from July 2010

-15%

-17%

67%

2.90

9.7%

The popularity of fixed-rate mortgages is beginning to recede after hitting a 18-month high in April. In July, 60% of borrowers took out a fixed-rate product, down from 62% in June. This drop follows increasing expectation that there will be no rise in bank rates in the near future. But the path of interest rates into next year is far from certain and many borrowers may continue to opt for fixed rates to avoid the uncertainty.

The majority of borrowers are continuing to opt for repayment mortgages. 42,200 loans for house purchase (86%) and 24,300 remortgage loans (77%) were taken out on a repayment basis in July.

Commenting on the data, CML director general Paul Smee said:

"The UK mortgage market is currently holding steady. But August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months. However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.3 million mortgages in the UK, with loans worth over £1.2 trillion.

2. Source: CML Regulated Mortgage Survey.

3. The Council of Mortgage Lenders does not publish statistics for mortgage approvals. The data in our monthly Regulated Mortgage Survey and gross lending press releases relate to mortgage advances only. A mortgage approval is the firm offer to a customer of a specific amount of credit secured against a particular property. A mortgage advance is the total amount of loan actually provided to the buyer, by the lender. Please see the mortgage statistics timeline on our website for further information.

4. The August 2011 data will be released on Tuesday 11 October 2011.

 

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