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Written by rosalind renshaw

Demand for mortgages in July was weak in what is traditionally a strong month, according to the Council of Mortgage Lenders. This morning's RICS survey – which relies on anecdotal evidence from a minority (just 259)  of its members – added to the bleak news on the housing market. It said that house prices were falling and that surveyors expect house prices to fall further. The RICS also reported the lowest level of newsly agrees house sales in two years.

There were 56,000 loans for house purchase (worth £8.4bn) advanced in July, up from 52,000 (worth £7.7bn) in June, and from 53,000 (worth £7.3bn) a year ago. Long term averages would be about average.
 
The July volumes, despite their small improvement from June, still represent a very weak market, said the CML. Yesterday, the Mortgage Advice Bureau reported that applications for mortgages in August were down 12% on those made in July.

Remortgaging failed to show any recovery in July, said the CML. The 28,000 remortgage loans in July (worth £3.5bn) were unchanged from June and down 29% from 40,000 (worth £4.9bn) in July 2009.

Loans to first-time buyers went into decline, falling to 19,400 (worth £2.4bn) in July, from 19,700 (also worth £2.4bn) in June and from 20,100 (worth £2.3bn) in July 2009.

First-time buyers’ share of the market was at 34% in July, down from 38% in June. This is the lowest proportion since before the credit crunch began in August 2007.

The take-up of full repayment products has remained high for a year. In July, 90% of first-time buyers took out a repayment mortgage, compared to July 2007, before the credit crunch, when only 67% did, while 72% of home movers and 70% of those remortgaging also chose a full repayment mortgage in July.

CML economist Paul Samter said: “The increase in the prevalence of repayment mortgages is likely in part to reflect the anticipation of regulatory changes by the Financial Services Authority to limit the availability of interest-only mortgages.

“More generally, lending criteria remain tight, underpinned by caution on the part of both borrowers and lenders in the light of continuing economic uncertainty.”

Comments

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    And yet that 'anecdotal' evidence is a recognised indicator for future movements in the market. The RICS Housing Market Survey is the longest running housing survey (since 1978) and the data is used by the Bank of England in determining interest rate movements.

    • 14 September 2010 14:35 PM
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