Business

UK mortgage lending still subdued, lenders say

Estate agency
Image caption There is no sign yet of an upturn in lending and sales

The number of mortgages lent in July was still much lower than a year ago, figures from the Council of Mortgage Lenders show.

The number of new loans to house buyers was 48,400 in July, up 1,000 from June but still 6,900 lower than a year ago.

The number of first-time buyers, at 18,200, fell back by just 300 from June and was 1,300 down on a year ago.

First-time buyers are still having to put down deposits averaging 20% of their purchase price to obtain a loan.

'Weak appetite'

"August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months," said the CML's director general Paul Smee.

"However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages," he said.

Figures from the Bank of England showed that in July 49,239 new mortgages were approved, but not yet lent, to house buyers.

That represented the third monthly increase in a row and would normally suggest an impending upturn in sales.

Brian Murphy, of mortgage brokers the Mortgage Advice Bureau, said: "All the economic mood music is that the base rate will stay at its current record low level until well into next year, and possibly even longer."

"But lending levels are still low and there is a long way to go until this bruised industry can return to anything like normal," he added.

With house prices rising slightly so far this year, the average new mortgage has gone back up to £120,000, the CML said.

As a result, the total amount of money involved in the new loans in July rose to £7.3bn from £6.9bn in June, putting gross lending at its highest level since August last year.

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