Mortgage lending picked up in July, according to figures from the Council of Mortgage Lenders (CML). The overall value of mortgage lending increased to £7.3bn from £6.9bn in June. In volume terms 48,800 were signed, up from 37,800. The value of mortgages extended to first-time buyers also increased, to £2.3bn from £2.2bn in June.
However, the number of loans to first-time buyers fell to 18,200 from 18,500 the previous month. The lending criteria for new mortgage borrowers also remain strict. The average deposit required remained at 20 per cent in July. The multiple of income that first-time buyers can borrow is also shrinking. They typically took out a loan worth 3.18 times their income in July, down from 3.22 in June.
There is also a question mark over the sustainability of the pick-up in lending. Paul Smee, the CML's director general, 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."
The CML figures also suggest that mortgage borrowers are moving away from fixed-rate deals. Some 60 per cent took out a fixed-rate product in July, down from 62 per cent in June. This trend probably reflects an increasing awareness that interest rates are likely to remain low for an extended period.
Howard Archer of IHS Global Insight said: "While housing market activity has edged up from its lows recently, it remains weak compared to long-term norms... House prices are likely to fall by around 5 per cent overall from current levels by mid-2012."Reuse content