The usual holiday dip is partly to blame, but the heat has come off the unusually high levels of activity seen earlier this year, says Knight Frank Finance.

The firm reports that the number of £500k+ mortgage completions rose by 122% in July but growth has slowed to a 2.9% rise in applications over the three months to July.

“The year-on-year growth in mortgage volumes at 122% is flattered by the fact that the market was only beginning to recover in July last year from its record low position a few months earlier,” says Simon Gammon, head of Knight Frank Finance.

“The more critical figure to note is the slowing in the volume of applications over the last three months by 9.3%. There are fewer buyers active right now, but ironically those that are active are being courted by a wider range of banks active in the £500k+ mortgage market. We have seen a growth in products in the £500k+ and £1m+ markets respectively over the past three months.

“Not only have the range of products widened, but rates are falling and LTV options are improving. Our average rate on agreed mortgages fell from 3.48% to 3.02% between June and July, and average LTVs have risen from 58% in June to 66% in July.”

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Private banks are still offering products at the 80% and 85% level and have also geared up the loan sizes they are prepared to meet, says Gammon.

Meanwhile, in July, fewer borrowers chose fixed rate mortgages reversing their popularity rise since March, with the ratio of fixed rate mortgages arranged by the firm slipping from 65% to 56%.

This change coincided with a renewed shift to lower average mortgage rates – which fell from 3.48% in June to 3.02% in July with expectations shifting towards interest rates at record lows for longer.