Mortgages see a rise for first time in two years

The number of new mortgages for home purchases rose in July for the first time in over two years.

Data released today by the Council of Mortgage Lenders (CML) show the first annual growth in lending to home buyers since early 2007.

A total of 56,000 homebuyer mortgages went through in July – a rise of 19 per cent on a year ago and 24 per cent on June.

Remortgage lending – however – remained depressed down 53 per cent on a year ago.

The tightening of lending criteria, the rise of those with little or no equity in their homes and low standard variable rates (SVRs) have all kept a lid on remortgaging.

CML economist Paul Samter said: "It's tempting to call the turn in the mortgage market at this point, and there is certainly concrete evidence that lending for house purchase is increasing.

"But there are still constraints affecting the lending industry's capacity to fund increased lending, as well as less consumer motivation to remortgage for the time being."

He added; "The overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet."

Some 20,400 first-time buyer mortgages went through in July – an annual rise of 22 per cent.

The average loan-to-value rate for first-time buyers were 75 per cent – meaning a first-timer had to find a deposit of over £37,500.

Low interest rates meant affordability increased for first-time buyers, with an average of 15.0 per cent of income covering interest payments, compared to 19.8 per cent a year ago.

Of all mortgages, over three-quarters where fixed rate deals with an average rate of 4.7 per cent.