July saw a dip in mortgage lending, with gross advances falling 6.1% from the previous month, confirming reports of the predicted slowdown in the mortgage market.
According to the latest DETR/CML figures, gross lending fell back from £11.4 billion in June to an estimated £10.7 billion in July, with loans for house purchase at £7.1 billion sinking from £7.7 billion in the previous month.
The average fixed rate fell to 6.37% from 6.31% in June while the average new variable rate rose to 6.07% compared with 6.03% in June. This perhaps explains why variable lending was less popular falling 3% to 64% of all loans taken out in July.
Bernard Clarke, communications manager at the CML, said: “The latest figures show that variable rates were much less popular in July and more people were choosing fixed rates because in borrowers’ minds there is more chance of interest rates going up before they come down.”
Building society gross advances rose from £2.21 billion to £2.23 billion while new mortgage lending by the Major British Banking Groups (MBBG) totalled £6.8 billion compared with £7.5 billion in June.
David Dooks, director of statistics at the British Bankers Association (BBA), said: “The reduced demand for both mortgages and remortgages has occurred because more people are choosing equity withdrawal or home improvement loans on the back of their rising home values, because they are cheaper than personal loans and credit cards.”
“However, there is still plenty of activity in the housing market. Competition for business is as strong as ever. Lenders are releasing new products almost every week and people are going to move their mortgage to a different product if it is cheaper,” said Dooks.