House purchase lending highest in July 2011 since August 2010

Overall lending for house purchase rose by both volume and value in July compared to June, according to figures released this week by the Council of Mortgage Lenders (CML). The value increased from £6.9 billion to £7.3 billion and the volume from 47,800 to 48,800 properties. Both figures were at their highest since last August, though lower than July 2010.

By contrast, remortgaging rose both on a monthly basis, and year-on-year. There were 31,500 remortgages worth £4 billion in July, up from 31,300 worth £3.8 billion in June.

Average deposits for first-time buyers have held steady at 20% for most of the year and they typically borrowed 3.18 times their income in July, down from 3.22 in June. Home movers borrowed on average 69% of their property’s value in July, down from 70% in June, but this figure has varied by no more than 3% for nearly three years.

The popularity of fixed-rate mortgages is beginning to decrease. In July, 60% of borrowers took out a fixed-rate product, down from 62% in June. This drop follows increasing expectation that there will be no rise in the Bank of England Bank Rate in the near future. But the exact path of interest rates is far from certain and many borrowers may continue to opt for fixed rates for peace of mind.

Whatever opinion you have about interest rates and their likely future movements, it is advisable to take professional advice on the most cost-efficient way of financing the property you own.