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Mortgage market remains subdued in July

The mortgage market continued to be subdued in July in what is traditionally a strong month, according to the Council of Mortgage Lenders.

There were 56,000 loans worth a total of £8.4bn for house purchase advanced in July, up from 52,000 in June, worth £7.7bn, and from 53,000 worth a total £7.3bn a year ago.

The 28,000 remortgage loans, worth £3.5bn, were unchanged from June and down from 40,000, worth £4.9bn, in July 2009.

Loans to first-time buyers fell to 19,400, worth a total of £2.4bn, in July, down from 19,700, and also worth £2.4bn, in June and from 20,100 in July 2009, with total value of £2.3bn.

First-time buyers put down average deposits of 24 per cent in the month, unchanged from June but up from a recent trough of 21 per cent in April and May.

The CML says low interest rates mean that interest payments continue to take up a relatively modest share of income and at 13.2 per cent this was down slightly from the previous month and the lowest it has been since early 2004.

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

CML economist Paul Samter says: “The increase in the prevalence of repayment mortgages is likely in part to reflect the anticipation of regulatory changes by the FSA 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.”

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