First-timers drive the market
Lending totalled £4.6bn, while loan volumes were 25% higher than July last year, totalling 30,200.
The value of home purchase lending increased by a third (33%) year-on-year, contrasting with the state of remortgage lending which was down 5% in value at £3.9bn and 15% in volume at 25,100.
Jeremy Duncombe, director at Legal and General Mortgage Club, said: “For many existing mortgage borrowers remortgaging needs to be high on the agenda.
“Whilst it is encouraging to see lending to first time buyers increase, there is a rate rise around the corner and so we would expect to see remortgage volumes rising too.
“Attractive deals may now be coming to an end and borrowers should move quickly to secure the best rates.”
Home movers also drove the market, as the number of loans advanced to movers was 37,500 in July, 15% more than June and 19% more than July last year. By value, lending to movers was £7.2bn, 20% up on June and 31% up on July last year.
Total gross lending in July grew to £19.7bn, up 10% on June and 18% on July last year.
Paul Smee, director general of the CML, said: “The market has shown steady growth in house purchase and buy-to-let over the past few months with general improvements in economic factors across the UK allowing for more people to enter the property market.
“There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to all this change.
“The CML will continue working towards making sure future initiatives affecting the market, such as the European Mortgage Credit Directive, are introduced with equally minimal disturbance to borrowers and lenders.”
First-time buyer loan sizes increased to £127,500 in July, up from £123,750 in June, although first-timer incomes grew to £38,900 in July compared to £37,095 in June.
Jonathan Harris, director of mortgage broker Anderson Harris, said: “Loans for home movers and first-time buyers drove the housing market in July as borrowers took advantage of low mortgage rates and more stock coming onto the market.
“’First-time buyers continue to return to the market, and in July took on the highest average loan size for a first-time buyer on record.
“While this may be cause for concern, the new mortgage rules should at least ensure that those mortgages are affordable both now – and in the future, when rates rise.
“However, borrowers still need to be cautious about the level of borrowing they are taking on and not overstretch themselves.”
Buy-to-let lending grew by 9% in July to £2.4bn, an increase of 26% on £1.9bn recorded in July last year. Loan volumes also increased by 18% year-on-year, standing at 17,500.