Decline in July mortgages

AWD Moneyextra, the price comparison website, recorded a decrease in the value of mortgages completed by it customers, in July.

The figure for the month stood at £151,488.09, as compared with £166,732.43 in May, a record high for Moneyextra.

The most popular lender in July was the Halifax, the UK’s biggest provider of mortgages.

Experts at Moneyextra believe that the July figures reflect the impact of the five base rate increases since August 2006.

This view is supported by the fact that the average property value of £218,0331 in July was down by 4.65% on June and showing an increase of just 1.63% year-on-year

In addition, the average mortgage being sought by first-time home buyers was at its lowest level since January 2006, at £132,699.

According to Moneyextra, the housing market did not reflected the higher cost of borrowing earlier because large numbers of homeowners have been protected by fixed rate mortgages.

With an increasing number of fixed rate terms having come to an end, borrowers in this category have to face remortgaging at much higher cost.

A further base rate rise had been predicted for September of this year, but recent turmoil in the stock markets has reduced the likelihood of such an increase.

This could mean that the interest rate cycle is now at its peak, although analysts predict that any downward trend could be a year ahead.

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