By value, there was £4.6 billion of lending to first-time buyers in July - 10% up on June and 39% higher than July last year.
The typical loan size for first-time buyers continued to rise to £127,500 in July, up from £123,750 in June and the highest average loan size for a first-time buyer on record. The typical gross income of a first-time buyer household also grew to £38,900 in July compared to £37,095 in June.
First-time buyers' in July paid 19.6% of gross income towards covering capital and interest payments, up from 19.3% in June, but still significantly less than the recent peak of 24.8% in December 2007.
Paul Smee, director general of the CML, commented:
“The market has shown steady growth in house purchase and buy-to-let over the past few months with general improvements in economic factors across the UK allowing for more people to enter the property market.
"There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to all this change. The CML will continue working towards making sure future initiatives affecting the market, such as the European Mortgage Credit Directive, are introduced with equally minimal disturbance to borrowers and lenders."
Jonathan Harris, director of mortgage broker Anderson Harris, says:
"Loans for home movers and first-time buyers drove the housing market in July as borrowers took advantage of low mortgage rates and more stock coming onto the market.
"Given that rates are so competitive, it is surprising that remortgaging continues to be muted. This may be down to borrowers fearing that they won't be able to remortgage as a result of the new mortgage rules or simply enjoying such good standard variable rates that they don't see the point. Until an interest rate rise is imminent, many borrowers who are reluctant to remortgage are unlikely to feel the urge to do so.
"What may convince them is some of the great new rates coming onto the market since the summer. Lender competition is hotting up with Barclays, Nationwide, Skipton and Coventry all cutting their fixed rates this week. Falling Swap rates, as well as lenders looking to meet year-end targets, is behind these moves. With Mark Carney alluding to the possibility of a rate rise in the spring, borrowers may feel that the case for remortgaging is getting stronger.
"First-time buyers continue to return to the market, and in July took on the highest average loan size for a first-time buyer on record. While this may be cause for concern, the new mortgage rules should at least ensure that those mortgages are affordable both now - and in the future, when rates rise. However, borrowers still need to be cautious about the level of borrowing they are taking on and not overstretch themselves."
Charles Haresnape, Managing Director of Mortgages and Commercial Lending at Aldermore, says:
“It is great to see that first-time buyer numbers for July increased by 25% year on year. This demonstrates the improving availability of mortgage lending and the effectiveness of Help to Buy, and I believe also confirms that MMR has had a minimal impact on the market.”
