The mortgage market remained weak during July despite a slight rise in the number of loans advanced to people buying a home, figures showed today.
Around 56,000 mortgages were lent to people purchasing a property during the month, 7% more than in June, according to the Council of Mortgage Lenders.
The group said that while the increase reflected a seasonal rise in activity, the lending volumes still represented a "very weak market" during a period that is usually a strong part of the year.
There was a slight fall in the number of mortgages advanced to first-time buyers during the month, amid signs that banks and building societies were tightening their lending criteria again.
Around 19,400 loans were taken out by people buying their first home, 2% fewer than during June, although it was still the second highest figure this year.
The average deposit put down by a first-time buyer remained at June's level of 24%, after falling to 21% during the spring.
There was also a fall in the average income multiple lenders advanced to first-time buyers, with this dropping to 3.14 times their pay from 3.28 times in June, to reach its lowest level for a year.
The CML said: "Having eased during the early part of the year, loan criteria have now tightened a little.
"But low interest rates mean that interest payments continue to take up a relatively modest share of income.
"At 13.2% this was down slightly from the previous month and the lowest it has been since early 2004."
But despite interest payments remaining low, first-time buyers appear still to be having problems entering the market, with just 34% of all mortgages for house purchase advanced to people taking their first step on to the property ladder during July, down from 38% in June.
This was the lowest level since before the credit crunch first struck in August 2007.
By contrast there was a 13% increase in the number of mortgages lent to previous homeowners who were buying a new property, at 36,900.
However, this group also saw a slight rise the average deposit they were putting down at 33%, up from 31%, while the average income multiple they were lent also declined to 2.86% from 2.9%.
The number of mortgages taken out by people who were switching to a new deal remained unchanged from the previous month at 28,000, nearly a third lower than during July 2009.
The CML said the number of interest-only mortgages which were taken out remained low during July at just 8% among first-time buyers, compared with 29% in July 2007.
Existing homeowners were slightly more likely to opt for an interest-only loan at 22% among home movers and 24% among those remortgaging.
Paul Samter, CML economist, said: "The increase in the prevalence of repayment mortgages is likely in part to reflect the anticipation of regulatory changes by the Financial Services Authority to limit the availability of interest-only mortgages.
"More generally, lending criteria remain tight, underpinned by caution on the part of both borrowers and lenders in the light of continuing economic uncertainty."Reuse content