This is the highest monthly estimate for gross lending since October 2008 (£18.6 billion).
Commenting on market conditions in this month's Market Commentary, CML market and data analyst Caroline Purdey observes:
"An improvement in sentiment and activity continues to show in the UK housing and mortgage markets, with a more positive picture also starting to emerge in the economy.
"Our forward estimate of gross mortgage lending in July reinforces a growing evidence base of a strengthening in the housing and mortgage markets."
Andy Knee, Chief Executive of LMS, commented:
“This morning’s figures show that the upward trend in gross mortgage lending is continuing, showing a 12% rise to £16.6bn in July, which is an incredible 29% higher than this time last year. Despite subdued remortgage activity during June, with both gross remortgage lending and the number of remortgagers experiencing a fall, our latest figures suggest that this area also looks to have experienced a more prosperous month in July.
“Now Mark Carney has confirmed that interest rates will not be rising until unemployment levels fall below 7%, those looking to remortgage do have a little more time to consider their options. However, they must also be mindful of the seismic shift towards higher end LTVs which will occur at the beginning of next year, and so must act soon.”
Simon Crone, Vice-President Commercial – Mortgage Insurance Europe at Genworth said:
“The fact that gross mortgage lending in July was 12% higher than June and 29% higher than the equivalent month last year certainly shows that things are heading in the right direction and that the gradual market recovery is continuing. However, amid all the excitement, it’s worth remembering that the figures are improving from a historically modest base and that we are still some way short of the activity levels witnessed before the global financial crisis. While it is encouraging that lenders and borrowers are regaining some of the confidence that was eroded over the past few years, it is also worth bearing in mind that mortgage activity is still being artificially supported by initiatives such as the Funding for Lending scheme. When we are witnessing these kind of figures without ongoing state support is when there will be real cause for celebration. It is heartening that more first-time buyers are able to realise their property aspirations, but we must continue to ensure lenders are providing a steady supply of higher LTV mortgages rather than relying on factors such as familial assistance.”
Duncan Kreeger, director of peer-to-peer bridging lender West One Loans, comments:
“This is just a brief morsel of comfort for those trying to squeeze support from traditional lenders. But it is important – it demonstrates how mainstream finance has made no progress at all for half a decade. In fact things have gone backwards. This is 12% worse than the average monthly figure for 2008, so the big banks aren’t even treading water. Given that these very same lenders have already received more than £16 billion from Funding for Lending, a bigger total for July wouldn’t have been unreasonable.
“With high street lending going backwards, it’s no surprise individuals and businesses alike are turning to alternative finance. Especially given the high street’s nervous approach – lending only to the plainest, risk-free projects. Meanwhile, we’re seeing milestone after milestone whizz by. And with mainstream banks still stuck in their old ways, shedding market share as they go, this is only set to continue.”
Paul Hunt, managing director of Phoebus Software said:
“It’s clear the rejuvenated mortgage market is gaining strength month by month and there’s been a pick-up in confidence in the property sector, now that the economy is out of the bad lands. Optimism is growing rapidly as gross mortgage lending is up by 12.6%, and has grown substantially to the highest level we’ve seen since October 2008. And first-time buyer lending is at its highest since the banking crisis. The Funding for Lending scheme has worked wonders in supporting mortgage availability and has boosted cheaper funding as banks and building societies have been able to lower their costs. At the same time Help to Buy has emerged as another incentive for banks to increase high LTV lending even more. Mortgage rates are at record lows and lenders have helped transform conditions for a range of buyers thanks to their proactive approach to lending.”
Ben Thompson, MD, Legal & General Mortgage Club says:
“At the moment it seems that the only way is up for housing market. Following government stimulus we have now seen increasing house prices, much needed plans in place to increase the number of homes being built in the UK and now positive figures showing that gross mortgage lending is up 29% on July 2012. Its crucial that at every stage supply meets demand so that we have a balanced market that is not skewed and is accessible. The market needs to be sustainable and there is still a lot of work to be done to ensure that it is. Figures like today’s stats from the CML can only help matters though.”
Brian Murphy, head of lending at Mortgage Advice Bureau, commented:
“As gross mortgage lending swelled to £16.6billion in July, its highest level for five years, borrowers also benefited from a boom in product choice. With over 10,000 products on offer for the first time since the financial crash, consumers were spoilt for choice in July.
“Additional funding through government initiatives has caused lenders to compete for business in order to catch ambitious lending targets. Since the start of the Funding for Lending Scheme began rates have fallen by one percentage point across two, three and five year fixes. The market is certainly ripe for picking, with the best choice of products and deals for years. Investing time to weigh up the options can really pay off in the long term."
