House Loans Faltered In July

There was a weak demand for mortgages in July, which is normally one of the strongest months for house purchase loans.

Money House: home loansAlthough 56,000 loans for house purchases were arranged in July, three thousand more than in June, this is in line with seasonal activity, as the housing market is generally more active in early summer.

According to the Council of Mortgage Lenders, these figures are low compared to before the credit crunch, however,

The mortgage market has generally been subdued this year as the lenders continue to enforce strict criteria for mortgage eligibility.

Having eased during the early part of the year, loan criteria have now tightened a little.

First-time buyers put down average deposits of 24% in the month, unchanged from June but up from a recent trough of 21% in April and May. But low interest rates mean that interest payments continue to take up a relatively modest share of income. At 13.2% this was down slightly from the previous month and the lowest it has been since early 2004.

Home movers have also been forced to supply larger deposits to secure a suitable mortgage. They have seen their average deposits rise again – from 33% in June to 35% in July. But their interest payments as a percentage of income have held steady at 9.6% – still the lowest share going back to the early 1970s.

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