House purchase lending up 19% in July
The Council of Mortgage Lenders (CML) has reported that lending for house purchases rose in July, showing annual growth for the first time since early 2007.
Approvals increased to 56,000, up 24% on June and 19% on a year earlier.
In terms of value, house purchase loans totalled £7.5 billion compared with £7.1 billion in July of 2008.
Remortgaging remained “unsurprisingly weak”, according to the CML, despite rising for the second consecutive month; approvals stood at 41,000, up 21% on June but 53% down on July of last year.
In value terms, July remortaging approvals totalled £4.7 billion, down 12% on the previous month and 61% year-on-year.
Total gross lending for the month stood at £14.5 billion, or 42% lower than a year earlier.
There were 20,400 first-time buyer loans and 35,700 home mover loans in July 2009, up 18% and 28% respectively on June.
Year-on-year, first-time buyer numbers increased 22% and home mover approvals 17%.
The CML notes: “The rise in house purchase lending in July was concentrated more heavily towards home movers than in June, when the largest rise was seen in first-time buyer activity.”
In July, the proportion of income spent on mortgage interest payments rose to 15% for first-time buyers, compared with 14.9% in June, but still showed an improvement on the the 19.8% recorded in July 2008.
For home movers the proportion stood 11.1% compared with 11.3% in June and 12% a year earlier.
In terms of product choice, over three quarters of mortgages taken out in July were at fixed rates, with borrowers able to lock in to an average fixed rate of 4.7%.
Commenting on the data, CML economist, Paul Samter, says: It’s tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing.”
However, he adds: “The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”