Lending rose by 8% from £11.7 billion in June and was 2% higher than the total of £12.5 billion in July 2011.
In today’s CML market commentary, CML market and data analyst Caroline Purdey comments:
"Gross mortgage lending showed an 8% increase from last month, continuing the see-saw pattern seen throughout this year, albeit against a broadly flat market.
"Interpretation of recent trends continues to be challenged by one-off effects. We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through.”
Ashley Brown, director of independent mortgage broker, Moneysprite, says:
"Much like the property market, the mortgage market is down one month, up the next. There's a lot of talk about distorting, one-off effects, but the real distortion in the market is far more fundamental: the lack of appetite among lenders for anything higher risk.
"There is activity in the mortgage market, but unfortunately not the right type of activity. Until lenders start lending consistently at higher loan to values, the mortgage — and subsequently property — markets are destined to cruise.
"For the property market to regain any kind of traction, we need to see lenders target borrowers with smaller deposits, or less equity, far more aggressively, but the will to do so simply isn't there.Buy to let, check. Big deposits, check. High LTVs, scratch.
"Those first time buyers that are managing to buy are almost always being supported by their parents."
David Whittaker, managing director of Mortgages for Business, said:
“So far this year, growth in overall mortgage lending has been as consistent as a rolling rugby ball. These figures are the latest of a series of unpredictable peaks and troughs which show precious few signs of significant recovery for the market as a whole. In contrast, buy to let lending has been relatively healthy over this period with seven straight months of growth. But buy to let is only one of the pillars which supports a healthy lending market and cannot carry the weight of the sector in isolation. Until we see significant improvement in the strength of the other elements of the lending market we’ll continue to see the rugby ball bounce we’ve grown so accustomed to over the last few years.”
David Brown, commercial director of LSL Property Services, comments:
“The improvement in lending in July has been flattered by comparison with a very slow market in June. In reality, it is still very tough for first-time buyers to get their feet on the first rung of the property ladder despite the historically low mortgage rates available, and demand for rented accommodation is going from strength to strength. Cash buyers and the equity rich remain the engine room of the housing market at present, and this won’t change until lenders feel confident enough in the economy and the eurozone to begin to lend more heavily to those they perceive as higher risk.”
David Newnes, director of LSL Property Services, comments:
“It is very encouraging that lending picked up during July, despite the recession and the Eurozone crisis haunting financial markets and undermining lender confidence - but the increase has more to do with a subdued June than a sudden improvement on the ground for new borrowers. In reality, it’s not an easy time for first time buyers, who still face significant barriers when it comes to securing mortgage finance, and hefty deposit requirements remain too big an ask for the vast majority of potential buyers. Pressure is mounting on the Funding for Lending scheme to boost activity in the lower tiers of the market, but there is no guarantee that lending will be diverted to those without substantial equity. Lending needs to focus on helping meet the needs of those lower down in the housing market if serious change is to emerge.”
