Record levels for mortgage lending

20 August 2003
Mortgage lending reached another new record in July, according to the latest figures from the Council of Mortgage Lenders.

The organisation's monthly survey showed that the number of people borrowing money to buy a home rose during last month, while gross advances reached a new high, rising by 12 per cent to £25 billion.

There were also signs that first-time buyers were returning to the market, with their numbers increasing from 30,000 the previous month to nearly 35,000.

However, first-time buyers still accounted for just 30 per cent of loan applications.

Michael Coogan, CML director general, commented, "July's figures support the picture of a housing market that remains stronger than expected.

"The apparent increase in first-time buyers in July is welcome, as their numbers have been seriously depleted in recent months."

Lending for house purchase was £11.6 billion, 20 per cent higher than in June and the highest figure since August last year.

Some 46 per cent of all lending in July was for house purchase, the highest proportion since last December.

Remortgaging also remained strong during July at £10.7 billion, which was the second highest monthly figure ever.

Fixed rates mortgages once again increased in popularity, accounting for 55 per cent of lending in July, up from 53 per cent last month and just 22 per cent a year ago.

House prices continued to strengthen, with consumers borrowing higher income multiples than they were a year ago.

Mr Coogan added, "We do not anticipate any shocks to the market that would cause serious problems. However, neither is the current buoyant situation likely to continue indefinitely - to some extent the market is making hay while the sun shines.

"We continue to expect house price inflation to slow down looking ahead into next year. The risks of a correction have not gone away, and borrowers should remain wary of over-committing themselves," he advised.