Source: cml.org.uk
Media coverage of the latest data from our regulated mortgage survey focused on how lending for house purchase in July showed its first material year-on-year growth for more than two years.
The data showed that there were 56,000 loans for house purchase in July, 19% more than in the same month last year. At £7.5 billion, lending for house purchase was 6% higher than a year ago. This was the first time since February 2007 that we had reported a year-on-year increase in both the number and value of loans for house purchase.
Not surprisingly, however, the data showed that remortgaging remains weak. With 41,000 loans for remortgage, worth £4.7 billion, the numbers were higher than in June. But loans for remortgaging in July declined year-on-year by 53% in number and 61% by value.
More than three-quarters of mortgages in July were taken out at fixed rates, with borrowers able to lock into an average rate of 4.7%, well below the average of 5.57% over the last decade.
With concrete evidence that lending for house purchase is increasing, it is tempting to call the turn of the mortgage market. But there are still significant constraints on the industry’s capacity to fund increased lending, as well as limited consumer demand for remortgaging at this stage.
Overall, lending is likely to remain relatively subdued in the coming months, particularly as the wider economy is far from robust at this stage.
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