House purchase lending showed its first material annual growth for the first time since 2007 this July.
The Council for Mortgage Lenders (CML) has revealed that despite the number and value of remortgages remaining low compared to July 2008, the number of house purchase loans increased to 56,000, which is a 24 per cent increase on the previous month and a 19 per cent rise since July 2008.
However, despite gross mortgage lending now totalling £14.5billion, with house purchasing loans accounting for more than 50 per cent of this total, following the second successive increase in two months, the total remains 42 per cent lower than in July last year.
Since July 2008, the number of remortgage loans has fallen by 53 per cent to 41,000, while the value of remortgage loans has seen a 61 per cent fall in the same period.
According to the CML, the number of fixed rate mortgage taken out in July was at its highest level since June 2007, as more than three quarters of borrowers chose to lock in to a fixed rate, taking advantage of an average rate of 4.7 per cent, which is below the overall decade average of 5.6 per cent.
However, despite the increased activity in the mortgage market, Paul Samter, CML economist believes there are still some restrictions on lending activity, he said:
"It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing. But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being.
"The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet," he added.
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