This was also the second month that volumes and values increased compared to the same month in 2014. UK gross lending in July totalled £21.7bn, up 8% on June and 12% up on July last year.
The rise in the number of loans for house purchase in July was driven by both first-time buyers and home-movers. However, the increase in volume and value terms for home movers was much stronger than for first-time buyers. This was the highest monthly lending level by volume since November 2007, and by value the highest monthly level since October 2007.
Nevertheless, first-time buyers took up 45% of total house purchase lending, which continues to make up a larger proportion of activity than pre-crisis levels when it made up as little as 30% of the number of loans for house purchases. The value of home-owner loans for house purchase accounted for 56% of gross lending, while remortgage activity accounted for 24%.
July saw the highest monthly first-time buyer lending level by volume and value since August 2007. The proportion of first-time buyer gross household monthly income in July to service the capital and interest rate payments of their mortgage rose slightly from 18.3% in June to 18.5%. This is still lower than in July 2014 when it was 19.5%, and much lower than the most recent high of 24.8% in December 2007.
Home mover lending levels also hit their highest by volume since December 2009, and by value the highest monthly level since November 2007. Home movers spent 18.1% of their monthly gross household income to pay capital and interest repayments, up slightly on last month but down on the same period last year. Like first-time buyers, this is still much lower than the most recent peak of 23.7% in March 2008.
After the sudden sharp rise in June in remortgage activity, remortgage activity settled slightly down 6% by volume and 4% by value in July, but there was still a substantial increase 26% by volume and 34% by value on July 2014.
Buy-to-let lending for house purchase has showed stronger growth than home-owner loans for house purchase for most of the year, which is in part a market recovery response as buy-to-let lending declined more than home-owner loans during the downturn. While loans to home-owners for house purchase declined by 50% in volume terms from 2007 to 2009, BTL loans for house purchase declined 71% in the same period. Buy-to-let represented 18% of gross lending in July.
Overall, buy-to-let lending rose sharply in July, increasing both month-on-month and year-on-year by volume and by value for the third consecutive month in a row. While buy-to-let house purchase rose significantly, these increases are driven more by strong buy-to-let remortgage activity since the beginning of the 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. This positive direction of travel going into the autumn months reinforces our recent revised forecasts that lending levels should continue to grow gradually over the rest of the year after a subdued beginning of the year."
