Lending to first time buyers and home movers decreased in July and recovered in August despite fear of a crash after the Referendum.
The Council of Mortgage Lending (CML) report shows for the month immediately after the Referendum the number of mortgages reduced by 14% from 67,700 mortgages in June to 58,100 in July 2016.
Combined mortgages were £10.6 billion with £4.4 billion of first time buyers lower by 19% and home movers £6.3 billion down by 9% on the month.
Paul Smee, director-general of the CML said the figures cover the first full month of lending following the EU referendum and show a decline in first-time buyer and home mover activity as well as subdued activity from the buy-to-let landlords.
First time buyers down the most
During July the number of first-time buyers was 28,200 reducing from 34,100 in June although the number of loans advanced was the second highest monthly level of the year so far said Mr Smee.
In terms of mortgage affordability the typical loan size decreased to £133,000 in July from £135,700 in June and average age of a buyer was 30 years.
Average household income of borrowers reduced from £40,400 in June to £40,100 in July which meant the income multiple was unchanged at 3.55 times loan to income.
Family members could help first time buyers as the equity release buyer can use a lifetime mortgage to access cash and give a child or grandchild the deposit on their first home or reduce inheritance tax owed by your beneficiaries.
For home movers there was a small change in borrowing increasing from to £171,400 in July from £171,000 in June with the average age of buyers of 39 years.
Income multiples increased slightly from 3.26 to 3.29 times loan to income for July as the average household income of a home mover also increased to £55,000 from £54,700.
Lending to remortgage buyers increased for the month up 7.1% to £6 billion and this was 20% higher year-on-year and the highest monthly amount borrowed for remortgage since January 2009.
August mortgage lending increases
The latest figures from the CML show lending for August is higher by 7% to £22.5 billion compared to £21.1 billion in July.
Over the year mortgage lending is 15% higher from £19.5 billion in August 2015 and this is the highest figure for this month since 2007 when gross lending reached £33.6 billion.
CML senior economist Mohammad Jamei has said Widely voiced fears in recent months about the housing market have proved to be wide of the mark.
Post-referendum the prospects for house purchase activity looked subdued, however, sentiment in the market recovered for August reflecting stronger than expected lending figures.
The Bank of England reduced interest rates in August to 0.25% with lower mortgage rates from lenders and a subsequent uptick in approvals is anticipated said Mr Jamei.
Lending levels are lower than earlier this year as affordability constraints and lack of properties on the market for sale continue to bear down on borrowers.
The Bank also continues to indicate another rate cut on the cards, if medium term prospects remain unchanged.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even pay for care at home.
Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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