House purchase lending to home-buyers increased month-on-month in July totalling 67,700 loans, up 10% compared to June and the value of these loans totalled £11.8bn, a rise of 15% on June. Compared to July 2013, the number of loans increased by 21% and the value of lending by 33%.
There were 30,200 first-time buyer loans in July - 3% more than in June, and 25% up on July 2013. 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.
Lending to home movers also grew. In July, the number of loans advanced to movers was 37,500, 15% up on the previous month and 19% on July last year. By value, lending to movers totalled £7.2 billion, 20% up on June and 31% up on July last year.
Remortgage lending remains muted compared with both first-time buyer and home-mover lending. The number of remortgages in July was 4% up on June but 15% down on July last year. The value of these loans (£3.9 billion) was up 3% on the previous month and down 5% on July last year.
Buy-to-let lending grew 9% over the month to £2.4 billion in July, and an increase of 26% from £1.9bn in July last year.
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."
Jeremy Duncombe, Director at Legal & General Mortgage Club, comments on the CML figures:
“For many existing mortgage borrowers remortgaging needs to be high on the agenda. Whilst it is encouraging to see lending to first time buyers increase, there is a rate rise around the corner and so we would expect to see remortgage volumes rising too. Attractive deals may now be coming to an end and borrowers should move quickly to secure the best rates. Speaking to an adviser is a good first step in the right direction.”
