Remortgage business increases in July

The Council of Mortgage Lenders has seen an increase in remortgage business in July, up 14% in volume and 16% in value from June.

The CML says remortgage business increased in July and mortgage business levelled off but first-time buyers are still struggling to get loans.

In July there were 47,400 house purchase loans worth £7.1bn – unchanged from June – but a 51% fall by volume and 54% by value from July 2007.

The trade body says there were 85,000 remortgage loans worth £11.9bn in July, up 14% in volume and 16% in value from June and that the number of loans to first-time buyers declined to 17,300 in July, down 48% from July 2007 and 5% from June 2008.

It says loans to first-time buyers have declined in the face of tighter lending criteria, as well as the wait-and-see approach now evident in an environment of reduced house prices.

Michael Coogan, director-general of the CML, says: “Tighter lending criteria have clearly made it more difficult for first-time buyers to enter the market. The Stamp Duty and shared equity measures announced by the government last week will be helpful to those first-time buyers looking to enter now, but many may be waiting for house prices to stabilise.

“Restoring the flow of funding to the mortgage market is crucial to helping the housing market recovery and we look forward to the findings of the Crosby Review at the end of the month.”

The CML has found the average first-time buyer had a deposit of 15% in July, up from 13% in June, bringing LTVs down to levels not seen since the early 1980s.

First-time buyers typically borrowed 3.24 x income, down from 3.33 in June and the lowest multiple since July 2006.