CML: Lending weak in July

MORTGAGE lending in July continued to be weak in what is often a strong month, according to the latest figures released yesterday from the Council of Mortgage Lenders (CML).

The CML said mortgage lenders issued 56,000 new mortgages worth £8.4bn in July, up slightly on June’s figure of 52,000 mortgages at £7.7bn and 53,000 mortgages worth £7.3bn a year ago.

There were also 28,000 remortgages worth £3.5bn in July, unchanged from June and down from 40,000 (£4.9bn) in July 2009.

Meanwhile, loans for first time buyers declined to 19,400 in July, from 19,700 the previous month and from 20,100 in July 2009.

Average deposits also increased, the CML said. The average deposit first time buyers had to find was 24 per cent in July, up from 21 per cent in April and May. Meanwhile borrowers are now opting for repayment mortgages over interest only with 90 per cent of first-time buyers taking out a repayment mortgage, compared with 67 per cent in July 2007.

Ray Boulger, senior technical manager at mortgage broker John Charcoal, suggested housing market activity was likely to remain subdued for “a long time”.

He added: “I don’t believe house prices will fall dramatically because the problems are not around affordability but deposits. With interest rates as low as they are it will mean that people can afford to pay their current mortgage but they may not be able to move because they don’t have the equity in their current home But that means they won’t be putting their homes on the market either, so there won’t be a flood of properties onto the market to bring prices down.”