The national mortgage broker suggested this is because first-time buyers are no longer competing with investors for the same type of property – another indication the government’s tax rises were impacting landlords as planned.
MAB’s National Mortgage Index is based on monthly applications data compiled from more than 1,000 advisers across the UK.
The July data found the average purchase price remained broadly unchanged, with an average increase of £73 compared to June, and there was also marginal change in the average remortgage loan with a less than 0.5% month-on-month increase.
The average first-time buyer property purchase price decreased slightly at 0.3% compared to June.
This property price cooling was not just limited to first-time buyers, but MAB noted that where values had slipped in a region, for example the East Midlands, East Anglia and the South East, prices were not moving dramatically.
“Realistically, a downward movement in prices over the last month or so is likely to indicate that those selling are pricing realistically in order to secure a buyer, given that many of those now looking for property are securing their mortgage prior to starting their search and, therefore, have a budget which is not flexible,” the broker said.
This trend was reflected in the value of the average purchase loan applied for in July, which fell 0.2% to £174,787 and was unchanged on July last year.
Seven areas of the UK saw purchase loans fall in July: Scotland (down 3.2%), the North East (down 2.8%), Greater London (down 2.63%), East of England (down 2.09%), the South East (down 1.7%), the North West (down 1.0%) and East Midlands (down 0.7%).
Just four areas saw an increase in loan values: the West Midlands (up 2.5%), Yorkshire and Humber (up 2.1%), Wales (up 1%) and the South West (0.4%).
Some areas in the country saw significant swings in loan values compared to last year: Scotland (down 7.2%) and Greater London (down 2.0%) witnessed the largest falls, while the East of England (up 11%), West Midlands (up 6.7%) and North East (up 5.7%) had the biggest rises.
Fixed is king
Perhaps unsurprisingly, fixed-rate mortgages are proving highly popular as borrowers look to lock in to the current low interest-rates.
In July, 96% of borrowers fixed their mortgage, which is unchanged from June and a slight increase on last year’s 93%.
However, this trend was even more emphatic with first-timers, 98% of whom took fixed-rate options.
MAB head of lending Brian Murphy added: “Given that prices are now reaching all-time highs, a subdued level of house price growth for the rest of 2017 may not be such a bad thing.
“We don’t need prices to run out of control to the extent that it triggers a market correction, and prices do need to remain at a level whereby first-time buyers, who underpin the rest of the market, are able to afford to purchase in order to ensure that the rest of the property market ecosystem continues to function.”