Remortgaging reached its lowest proportion of total lending for 10 years in August, accounting for only 25% of loans, according to the Council of Mortgage Lenders (CML).
August saw 25,000 remortgage loans, worth £3 billion, advanced by lenders. The number of loans was down 13% and the value down 14% from July. Both were 19% lower than a year ago.
There were 51,600 house purchase loans (worth £7.7 billion) advanced in August, a fall of 8% (by volume and value) compared to July. While this is in line with the usual summer lull in market activity, a rise of 3% (by volume) and 12% (by value) from August 2009 shows that 2010 house purchase lending is still proving slightly more robust than the low levels in the equivalent months of 2009, the CML said.
The 18,300 loans (worth £2.3 billion) advanced to first-time buyers in August represented a decline of 5% (by volume) and 4% (by value) from July. First-time buyer loans were also down 3% by number, but up 5% by value, compared with August last year. First-time buyers in August put down on average a 21% deposit, compared to 24% in July.
Home movers suffered more than first-time buyers from the summer lull in August with the 33,200 loans (worth £5.4 billion) advanced down 10% (by volume and value) on July and average deposits up from 33% in July to 34%. This saw movers in August borrowing at the lowest loan-to-value ratio for six years. However, in terms of lending levels there was some improvement on a year ago, with home-mover loans 7% up (by volume) and 13% up (by value) from August 2009.
Fixed-rate products are enjoying a slow shift back to popularity with 52% of new borrowers opting for one in August, up from 51% in July.
CML director general Michael Coogan said: “August is a traditionally slow month for mortgage lending and it was no different this year. We expect a quiet market to continue for the foreseeable future. While we do not know what the impact of the comprehensive spending review will be on our sector
