Figures from UK Finance (formerly the Council of Mortgage Lenders), showed that first-time buyers borrowed £5bn in July, 15 per cent lower than in June but 14 per cent higher than in July 2016.
After a strong start to the year, the trade body warned that it expected house purchase borrowing to continue to slide in the next few months.
The average amount borrowed by a first-time buyer moved slightly up from £138,750 in June to £139,000 in July while average first-time buyer household income declined marginally, with the average income multiple nudged up from 3.59 to 3.60. The average loan-to-value (LTV) also rose from 83.3 per cent in June to 85.0 per cent, the same level as in July 2016.
Home movers borrowed £7.1bn, 9 per cent less than in June but 15 per cent more than in July last year. The average amount borrowed by movers was unchanged at £180,000, as was their average income multiple of 3.39. The average loan-to-value fell in July to 72.3 per cent from 73.1 per cent in June, still higher than the 71.5% in July 2016.
In contrast, the value and number of people remortgaging increased while there was a smaller increase in the value of buy-to-let lending. Remortgaging value totalled £6.7bn, a 12 per cent month-on-month and year-on-year increase. Remortgage transactions totalled 36,800, up 7 per cent on June and 10 per cent higher than July 2016. Buy-to-let lending totalled £3.2bn, 7 per cent higher than in June and 7 per cent higher than in July last year.
UK Finance’s head of mortgages policy, June Deasy (pictured), said: “Remortgaging strengthened in July and reached its highest level since January, with customers attracted by borrowing rates that are at or close to their historic low point.
“The increase in activity in July means that, over the last year, the number of people remortgaging has been at its highest since 2009. Lending for house purchase was lower in July than in the preceding month, and we expect the market to continue to soften a little in the coming months.”
Warning signs remain
Andy Knee, chief executive of remortgage provider Legal Marketing Services, commented: “July was a bumper month for the remortgage market. Homeowners remortgaged for added financial security as a record number of remortgagors fixed onto five-year deals at rock bottom mortgage rates.”
“However, the warning signs remain ever present. Inflation rose to 2.9% in August and mortgage rates could soon follow suit. For the time being, lenders will continue to offer consumers competitive deals. Homeowners looking to remortgage should do so in the near future to avoid missing out on low rates and monthly savings,” he added.