"First-time buyer numbers continue to be strong, helped in part by government schemes. But that has been offset by home movers"
Gross mortgage borrowing for the high street banks hit £13.2bn in July - in line with recent months but 5% higher than July 2016.
Net mortgage borrowing was also 2.5% higher on an annual basis.
UK Finance says first-time buyers and remortgage activity has "supported lending for some time", but anticipates the pace of growth to slow slightly, "dampened by a potentially more challenging economic outlook".
House purchase approvals of 41,587 in July were similar to the monthly average of 41,567 over the previous six months, but 9% higher than in July 2016 which reflects a slow period in the middle of last year around the time of the referendum.
Remortgaging approvals of 26,133 were up on the monthly average of 25,284 over the previous six months and 3% higher than in July 2016.
Eric Leenders Head of Personal at UK Finance, said: “Consumer borrowing from high street banks remained stable in July, as continued pressure on household budgets reduced spending and saving.
“Steady levels of mortgage activity seen through the first half of the year continued into July. First-time buyer numbers continue to be strong, helped in part by government schemes. But that has been offset by home movers, where a shortage of homes on the market is limiting their activity.”
John Eastgate, Sales and Marketing Director of OneSavings Bank, commented: “There have clearly been a number of forces at play in the housing market; on the down side we have continuing economic and political uncertainty weighing down confidence, however this is balanced by the persistence of super low interest rates for borrowers, and we have seen good levels of first time buyer activity. Set against this backdrop, it is encouraging to see lending levels up.
“A record number of homeowners will be coming to the end of their initial term in September and October, so we would expect remortgaging to play a bigger role in the coming months. In the buy to let market, we predict a boost in lending later this year as landlords strive to complete deals ahead of the PRA’s upcoming changes to portfolio landlord lending rules.”
Adrian Anderson, director of mortgage broker Anderson Harris, added: "The mortgage market continues to tick along although there is plenty of uncertainty ahead as we move into Autumn. As household incomes are squeezed, it remains to be seen whether borrowers will still be keen to take on new mortgages or whether they will prefer to stay put and see what the outcome of the Brexit negotiations will be. However, there are those people who need to move regardless and there are plenty of attractive deals to entice them."
