Homebuyers and remortgagors were relatively subdued in July as figures for both areas of the market fell, but other lending saw figures at an all-time high, according to the Council of Mortgage Lenders.
While home-buying and remortgaging dwindled, other lending, including buy-to-let mortgages, rose to it’s highest-ever value of £7.8 billion, accounting for 23 per cent of total lending.
In July, there were 94,000 house purchase loans taken out, worth £14.8 billion in total, and 92,000 remortgage loans which totalled £11.5 billion. A drop of seven per cent amongst first-time-buyers was noticed compared to June, seeing them fall to £4.4 billion in 32,400 loans.
The drop in first-time-buyer figures can, in part, be accounted for by the lack of affordability, which continues to worsen. July saw first-time-buyers facing a record average income multiple of 3.39, up from 3.37 in June and 3.23 the previous July. An average 19.7 per cent of first-time-buyers’ incomes was committed to their mortgage repayments.
The popularity of fixed rate mortgages prevailed throughout July, accounting for 79% of purchases and remortgages, but this could see a decline in light of recent predictions that the base rate has reached a peak and is now slowly making its way back down, which could cause homebuyers to opt for tracker mortgages.
Michael Coogan, CML Director General, commented: “A slight fall in lending between June and July has emerged for the third year in a row, so of course we cannot read too much into a single month's figures. But the long-anticipated slowdown in the housing and mortgage markets may now be beginning to materialise.
"Last week's MPC decision to hold rates was exactly as expected. Both market conditions and sentiment are coming off the boil, and affordability is ever more stretched, but consumers should not expect any immediate easing in the financial pressures they face.”
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